Economics Problems
1. What is your name?
2. Sketch a graph for a monopoly that is earning economic profit.
a. Label the axes.
b. The profit maximizing price is $100
c. The profit maximizing quantity is 50
d. Show the demand, marginal revenue, marginal cost, and average total cost curves facing the firm.
e. Shade the area that equals the firm's profit.
f. Identify the socially efficient quantity on the graph.
g. Shade the area that equals the deadweight loss.
Table B
|
Q
|
P
|
ATC
|
MC
|
|
10
|
270
|
150
|
115
|
|
11
|
268
|
147.91
|
127
|
|
12
|
266
|
147.17
|
139
|
|
13
|
264
|
147.46
|
151
|
|
14
|
262
|
148.57
|
163
|
|
15
|
260
|
150.33
|
175
|
|
16
|
258
|
152.63
|
187
|
|
17
|
256
|
155.35
|
199
|
|
18
|
254
|
158.44
|
211
|
|
19
|
252
|
161.84
|
223
|
|
20
|
250
|
165.50
|
235
|
|
21
|
248
|
169.38
|
247
|
|
22
|
246
|
173.45
|
259
|
|
23
|
244
|
177.70
|
271
|
|
24
|
242
|
182.08
|
283
|
3. What quantity minimizes average total cost?
4. What quantity maximizes profit?
5. What price maximizes profit?
6. What is the maximum profit?
7. What is marginal cost when quantity = a, your answer in question 4?
8. What is the socially efficient quantity?
What is the deadweight loss when the firm maximizes profit?
9. Name a product you purchased recently from a store in Richmond.
10. Does the store operate in a monopolistically competitive industry?
a. Yes
b. No
11. Describe how the industry meets or fails to meet each of the characteristics of monopolistic competition.
Watch this ad for Codfish sandwich.
12. Make the best case you can that this ad is not improving the efficiency of the allocation of the economies resources.
13. Make the best case you can that this ad is improving the efficiency of the allocation of the economies resources.
14. Which argument do you find most compelling? Why?