Chapter 9 Supplemental Questions

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Presentation transcript:

Chapter 9 Supplemental Questions

Units of Variable Input Question 1. Units of Variable Input Price/Unit Total Cost of Input Marginal Input Cost 1 2 2.5 3 5 4.5 8 6 A. Calculate the total input cost and the marginal input cost. B. If the marginal value or marginal revenue products were 4, what would be the profit maximizing level of input?

Quantity per unit of time Question 2. A. Find the equilibrium price and quantity for a monopsonist in the graph below. B. Find the equilibrium price and quantity under perfect competition in the graph below. C. What is the magnitude of monopsonistic exploitation? MIC 10 15 Quantity per unit of time 8 5 3 $/unit Supply of Input MVP or MRP

Question 3. On the following graph, show the effect of a lump-sum tax on a monopolist. Quantity per unit of time MC ATC MR D $/unit

Question 4. Using the graph below, answer questions a through d. A. What are the profit-maximizing price and quantity levels for the monopolist? B. Calculate profit. C. Suppose the government imposes a price ceiling of $40. Now what is the optimal price and quantity combination? D. Calculate the new level of profit.