Identify the market equilibrium if the industry operates

Assignment Help Microeconomics

Reference no: EM132926995

(1) Sally sells seashells by the seashore. When Sally prices her shells at £7 each, she sells 5 shells every day.
When she prices her shells at £6, she sells 6.
a. What is Sally's total revenue when she chooses to sell 5 shells (by pricing at £7)?
b. What is Sally's total revenue when she chooses to sell 6 shells (by pricing at £6)?
c. What is the marginal revenue Sally receives from deciding to sell a 6th shell?
d. The 6th shell sells for a price of £6. Why is the marginal revenue from selling a 6th shell so much lower than £6?

(2) A monopolistic seller of designer handbags faces the following demand curve: P = 50 - 0.4Q. The seller can produce handbags for a constant marginal and average total cost of £10.
(A) Calculate the profit-maximizing price for this seller.
(B) Suppose the government levies a £4 tax per unit on sellers of handbags. Calculate how this tax will affect the price the monopolist charges its customers.
NB: Solving this requires the use of the following derivative rule: The derivate of the function Y = X2 with respect to X is 2X; (X2)' = 2X

(3) The graph below shows the Demand curve for an industry, DD, the associated Marginal Revenue, RR, and the Marginal Cost, MC, which is horizontal and hence equal to the Average Total Cost
• Identify the market equilibrium if the industry operates under perfect competition
• Identify the market equilibrium if the industry operates as a monopoly
• By comparing the consumer and producer surpluses under the two different market structures show that the monopoly is inefficient

Reference no: EM132926995

Questions Cloud

Why does a monopoly always operate on the elastic part : Why does a monopoly always operate on the elastic part of the demand curve - Explain why consumers might reject a superior product for an inferior one in a mark

Investigate the concept of boulwarism : What strategies would you recommend HR employ to avoid for employees to unionize the workplace on?

How do evaluate techniques for creating effective schedule : How do Evaluate techniques for creating effective schedule. For this activity, assess your time management skills by using Ohio University's self-assessment.

What is the diversity of bank services : What is the diversity of bank services offered in the financial system and economic system in Tanzania? Use local examples

Identify the market equilibrium if the industry operates : Identify the market equilibrium if the industry operates under perfect competition and Identify the market equilibrium if the industry operates as a monopoly

What are three types of employee testing : What are three types of employee testing and the types of interviews available to organizations today.

Describe the rights and responsibilities of citizens : Explain the origin and development of constitutional democracy in the United States. Demonstrate knowledge of the federal system.

Compare the two major contemporary approaches : Compare the two major contemporary approaches to negotiations and describe the five stages in the typical process.

Using the tools of demand and supply analyse : Using the tools of demand and supply analyse how the move of the University of Ulster from Jordanstown to the Belfast City Centre to affect

User Account

All Pages