Assume the firm is a profit-maximizing/loss-minimizing monopoly. Using the data in the graph above, calculate the firm's total profit or loss.
Total profit = (price - ATC) × output
= ($120 - $150) × 1,100
= -$30 × 1,100
= -$33,000
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Answer the following statement(s) true (T) or false (F)
1. In the long run, a competitive firm that experiences decreasing returns must earn negative profits after all factor shares are paid out. 2. Factors that are supplied relatively inelastically earn more rents than those supplied more elastically. 3. Both the competitive firm's demand curve for labor and the monopoly firm's demand curve for labor always slope downwards. 4. When production is subject to increasing returns to scale profit will be positive. 5. If demand for output rises, producers' surplus increases more for factors with elastic supply curves than for other factors.
Refer to Figure 15-6. The profit-maximizing output and price for the monopolist are
A) output = 62; price = $24. B) output = 104; price = $20.80. C) output = 83; price = $22. D) output = 62; price = $18.
A monopolistic competitor is like a competitive firm in the long run, because
A) it earns positive economic profits. B) it earns zero economic profits C) both firms will earn positive economic profits. D) both firms will increase price to increase profits.
In which market structure will a firm choose not to shut down when price is less than average variable cost?
A. monopoly B. monopolistic competition C. perfect competition D. None of these. Any firms will shut down when P < AVC.