a)
To Draw: the graph for demand, marginal cost, and marginal revenue curves.
a)
Answer to Problem 12.2P
Explanation of Solution
Given Figure
Given demand is
Marginal cost is constant at
Marginal revenue curve=
The above figure shows that demand curve, marginal cost curve and marginal revenue.
One of the negatively sloped curve is demand Curve. Also the marginal revenue curve is negatively sloped and twice vertically than the demand curve. The marginal cost is fixed and finally marginal cost is horizontal.
Introduction:
When the produced quantity is added by one whenever changes occur in the whole cost is called marginal cost. Suppose many number of goods are produced that time the marginal cost will be increased unit by unit.
One of another revenue that would be generated by product sales when increasing with one unit is called market revenue. It’s defined by divide the changes in total revenue and changes in output quantity.
b)
To Calculate: the price and quantity associated with Point C, the
b)
Answer to Problem 12.2P
Industry Profit is
Consumer Surplus is
Social Welfare is
Explanation of Solution
Given Figure
Given demand is
Marginal cost is constant at
Marginal revenue curve=
When the Price equals marginal cost, i.e.)
The price level of
Thus, when the competitive equilibrium C, the quantity level is
The total revenue
The marginal cost is constant at
The total cost
Thus, the total revenue and total cost are equal, the industry profit is
The consumer surplus equals to the area of triangle BCD.
Area of triangle
Consumer Surplus
Social welfare= Consumer surplus +Industry Profit
Introduction:
c)
To Calculate: the price and quantity associated with point M, the
c)
Answer to Problem 12.2P
Industry Profit is
Consumer Surplus is
Social Welfare is
Deadweight loss is
Explanation of Solution
Given Figure
Given demand is
Marginal cost is constant at
Marginal revenue curve=
The monopoly outcome M, the quantity level is
The total revenue
The marginal cost is constant at
The total cost
Thus, the total revenue and total cost are
The industry profit is
The consumer surplus equals to the area of triangle BME.
Area of triangle
Consumer Surplus
Social welfare= Consumer surplus +Industry Profit
Deadweight Loss=Social welfare at competitive equilibrium - social welfare at the monopoly outcome
Introduction: One kind of firms are having formal agreement for collusion to produce the trademark output and sell in the trademark price is generally known as cartel. Extreme type of perfect collusion is called Perfect cartel. Through this, firms producing a different homogeneous product to make the centralized product.
d)
To Calculate: the price and quantity associated with point A, a hypothetical imperfectly competitive outcome, it lies at a price halfway between C and M and also compute industry profit, consumer surplus, social welfare and deadweight loss.
d)
Answer to Problem 12.2P
Industry Profit is
Consumer Surplus is
Social Welfare is
Deadweight loss is
Explanation of Solution
Given Figure
Given demand is
Marginal cost is constant at
Marginal revenue curve=
When the Price equals marginal cost, i.e.)
The price level of
The outcome A, the quantity level is
The total revenue
The marginal cost is constant at
The total cost
Thus, the total revenue and total cost are
The industry profit is
The consumer surplus equals to the area of triangle BAG.
Area of triangle
Consumer Surplus
Social welfare= Consumer surplus +Industry Profit
Deadweight Loss=Social welfare at competitive equilibrium - social welfare at the outcome A
Introduction: imperfectly competition occurs in a market suppose one of the conditions are left or unmet with perfectly competition. This kind of market is generally very common. Here products and services and prices are not set by supply and demand.
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Chapter 12 Solutions
EBK INTERMEDIATE MICROECONOMICS AND ITS
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