Economics Problem

The given information cannot achieve the outcome of marginal revenue is equal to the marginal cost. However, the profit still can be maximized when marginal revenue is larger to profit is maximized when Peter serves 6 members and the price charged by him is $300. 6. B It is asked whether the profit can be increased if peter set two different prices to two groups which are adults and children group. If yes, what are the prices? The profit will increase since group of customers has a different willingness to pay.

Peter can set an optimum price to each group which is the prize they expected. Then the profit will rise. The price for adult will remain at $300 with same explanation to 6. 2(a). The table below shows the situation on children group. Marginal revenue is larger to marginal cost while these two quantities are very close to each other when the charge is $240 so the price for children is $240. Price per child profit AAA State whether the following statement is true or false, and briefly explain why. A monopoly can always make positive economic profits because it faces no competition in the market. ” A monopoly is the only one seller of a good or service, and there is no close substitute. Figure 1. 1 Figure 1. Shows that a monopoly is obtaining a positive profit. The blue area is the economic profit. Figure 1. 2 shows when the average total cost increases and Just touch the marginal benefit curve. Average total cost is equal to the average revenue. So the economic profit is zero. Figure 1. Figure 1. 3 shows when the demand decreases, the marginal benefit is equal to average total cost. So the economic profit is zero again. The statement is false because when TACT increases or demand decreases, the monopoly economic profit will be zero or even negative. 6. B monopoly always produces at an output that is inefficient. ” By the concept of perfect rice discrimination, monopoly charges the highest price that consumers are willing to pay for each unit and extracting the entire consumer surplus.

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Figurer . 4 Figure 1. 4 shows a monopoly can sell a good or service at different prices. Pl is the highest price that the monopoly can charge. Figure 1. 5 In Figure 1. 5, the Marginal cost (MAC) cross the MBA=MR. curve because of the monopoly are used efficiently. The statement is false. The monopoly can charge the highest price and the resources are used efficiently. However, this is only a theoretical situation because a monopoly rarely follows the perfect price discrimination concept in daily.