ASSIGNMENT
Indicate if the following questions are True or False. Explain “Why” your answer is True or False.
- Firms exist to produce and sell as much as possible. Why?
- Employing economic cost/profit instead of accounting cost/profit when making business decisions tends to generate more efficient or superior economic results. Why?
- For a monopoly, the marginal revenue declines as they sell more. Why?
- Some oligopolistic firms try to collude to fix market prices. Why?
- Market concentration measures fail to accurately assess the industry market power. Why?
The following questions are short answer questions. Clearly “explain” your ideas.
- Explain why a firm should shut down immediately when it can no longer cover their variable.
- Calculate the average total, fixed and marginal costs for a “competitive” firm with the following production cost schedule.
q Total Cost ATC AFC MC
0 10
10 12
20 16
30 26
40 38
50 75
60 120
What output or q is the most efficient production level?
If the market price is $1.00 then what output or q is the most profitable production level?
- Explain why natural monopolies are regulated.
Explain why Economics is so cool. (Really)
