A company raises its cost per unit while also increasing its producer surplus per unit. Which of the following is correct if consumer WTP did not change: 1. The company is at a cost disadvantage. 2. Sales price per unit price has increased. 3. Volume of production is reduced. 4. The economic surplus per unit increased. 5. Marginal costs have risen.

A company raises its cost per unit while also increasing its producer surplus per unit. Which of the following is correct if consumer WTP did not change: 1. The company is at a cost disadvantage. 2. Sales price per unit price has increased. 3. Volume of production is reduced. 4. The economic surplus per unit increased. 5. Marginal costs have risen.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter4: Demand, Supply, And Market Equilibrium

Section: Chapter Questions

Problem 12P

See similar textbooks

Similar questions

True or false: Profit is the difference between the total revenue generated and cost of goods sold. True or False?
The SolarFarm powerplant has both fixed and variable costs. As the plant expands production, it first has constant returns to scale, and then diminishing returns to scale.(b) The government connects SolarFarm to a nearby town that is currently without electricity. Show in a new, large, graph how the market price and quantity of electricity sold change as a result.
in which of the following statement is true? (choose one letter only) a. the Marginal Revenue is the approximate revenue from the production and sale of the x+1 unit after x units have been sold.b. the Marginal Cost is the approximate cost of producing the x−1 unit before x units have been produced. c. the Marginal Profit is the profit from the production and sale of the xth unit. d. All of these e. none of the above
1. Price and output in a competitive price-searcher market Consider a price-searching firm, Sean's Fire Engines, which sells fire engines in the fictional country of Pyrotania. Initially, Sean's produced six fire engines but then decided to increase production to seven fire engines. The following graph shows the demand curve the firm faces. To sell the additional engine, Sean's must lower its price from $100,000 to $50,000 per engine. (Hint: Sean's Fire Engines gains revenue from the additional engine it sells, but it also loses revenue from the initial six engines because it sells them all at the lower price.) On the following graph, use the purple rectangle (diamond symbols) to shade the area representing the revenue lost from the initial six engines by selling at $50,000 rather than $100,000. Then use the green rectangle (triangle symbols) to shade the area representing the revenue gained from selling an additional engine at $50,000. re engine) 250 225 200 Q Search Revenue Lost Col
Vintage Camera T Temple MIS G is You have the following data for product X: sales revenue $14,000, allocated fixed costs $12,000, variable costs $20,000. You cannot increase the price of product X or improve the production process to increase profitability. What should you do about product X? O do nothing - unprofitable products are just one of the costs of doing business O keep the product both in the short term and in the long term O keep the product in the short term and drop it in the long term O drop the product both in the short term and in the long term O drop the product in the short term and keep it in the long term
On the graph input tool, change the number found in the Quantity Demanded field to determine the prices that correspond to the production of 0, 6, 12, 15, 18, 24, and 30 units of output. Calculate the total revenue for each of these production levels. Then, on the following graph, use the green points (triangle symbol) to plot the results. Calculate the total revenue if the firm produces 6 versus 5 units. Then, calculate the marginal revenue of the sixth unit produced. The marginal revenue of the sixth unit produced is________. Calculate the total revenue if the firm produces 12 versus 11 units. Then, calculate the marginal revenue of the 12th unit produced. The marginal revenue of the 12th unit produced is_________.
The graph below depicts the cost structure for a firm in a competitive market. Price P4 P3 P₂ P₁ PPPP I MC AVC Q₁ Q₂ Q3 Q4 When prices rise from P2 to P3 the firm finds that: a. marginal cost exceeds marginal revenue at a production level of Q2. b. if it produces at output level Q3 it will earn a positive profit. c. expanding output to Q4 would leave the firm with losses. d. it could increase profits by lowering output from Q3 to Q2. ATC Quantity
Consider the market for Blackberry cell phones. Assume the market is perfectly competitive and at a market-clearing equilibrium. What area represents consumer surplus? 1.) Use the triangle drawing tool to shade in consumer surplus. Label this area 'Consumer Surplus. What area represents producer surplus? 2.) Use the triangle drawing tool to shade in producer surplus. Label this area Producer Surplus". Carefully follow the instructions above, and only draw the required objects. Price of Blackberry cell phones Quantity of Blackberry cell phones
Price, P (dollars per pound) 10 0 QUESTION 5: COST STRUCTURES Feasible set 20,000 40,000 60,000 Quantity of Cheerios, Q (pounds) ● Isoprofit curve: $60,000 ● Isoprofit curve: $34,000 Isoprofit curve: $10,000 Isoprofit curve: $0 Demand curve 80,000 The figure to the left shows the isoprofit curves and demand curve for Cheerios breakfast cereal. Draw a diagram to show how the figure would change in each of the following cases. To make sketching the curves easier, assume the demand curve is linear. In each case, can you say what would happen to the price and the profit? a) A rival company producing a similar brand slashes its prices. b) The cost of producing Apple-Cinnamon Cheerios rises to $3 per pound. c) General Mills introduces a local advertising campaign costing $10,000 per week.
A movie theater shows films for a community of 10000 people. Right now, the price per ticket is $17.50. In the past, when they increased or decreased the price per ticket, they discovered that for every dollar (or fraction) that the price was increased or decreased, the attendance decreased or increased proportionally by 200 people. The theater owner pays the Film Distribution Company $10 (incremental cost) in royalties per person whoviews the film. Find a. The willingness to pay distribution of the movie goers. b. The average price they would be willing to pay. c. The price per ticket that maximizes revenue. d. Should the theater owner increase or decrease the price per ticket if she wants to maximize contribution? e. Find the consumer surplus if the tickets are priced at the price that maximizes contribution. Please complete in excel showing formulas on how it was completed
Suppose that total unit sales of iPhones and Android phones depends on both Apple’s and Google’s advertising expenditures: Google Advertise Don’t Apple Advertise 100, 100 120, 60 Don’t 60, 120 80, 80 To find the firm’s profits from the sales figures, assume that the price is $30, that the marginal cost is $20, and that the fixed cost of advertising is $300. (a) Fill in the profits in the following simultaneous-move game: Google Advertise Don’t Apple Advertise ? ? Don’t ? ? (b) What is the Nash equilibrium of the game? What strategies result in thehighest industry profits? Explain in words why the firms don’t choosethose strategies?
Happy Go Lucky Electric Company is the only company providing electric power to the city of Go Lucky. The accompanying graph depicts their marginal costs (MC), total costs (ATC), demand (D), and marginal average t revenue (MR). Move point E to the firm's profit maximizing price and quantity. At the profit maximizing point, what is Happy Go Lucky level of profit? 0 $150 $90 -$30 Price and Costs ($/unit) 10 9 8 7 6 10 4 3 2 1 0 0 5 10 15 20 25 30 35 MR MC 0 ATC D 40 45 50