Answer :
Answer:
Firm A
Firm A is charging a cost of $3.90 for every unit. The normal expense is the all out cost separated by amount which ends up being $3.70 per unit. Presently its minor income is $3.00 per unit and negligible expense is $2.90 per unit. The imposing business model firm can't create enough yield in light of the fact that the minor income surpasses the minimal expense.
Consequently, Firm A is encouraged to expand its yield. This will bring increasingly net income and get it a higher benefit. The yield should increment till minimal income and negligible expense gets equivalent.
Firm B
Firm B is charging a cost of $5.90 for every unit. The normal expense is $4.74 per unit. Presently its peripheral expense is $5.90 per unit. Note that the syndication firm is charging a value which is equivalent to the negligible expense. Consequently, it is carrying on seriously. by delivering more and charging less.
Consequently, Firm An is encouraged to diminish its yield. This will expand cost more than the expansion in cost with the goal that it acquires a higher benefit. The yield should diminish till minimal income and minor expense gets equivalent.
Firm C
Firm C is charging a cost of $11.00 for every unit. The normal expense is the all out expense is $11.90 per unit. Minimal income is $9.00 per unit and minor expense is $9.00 per unit. The imposing business model firm is delivering a benefit expanding yield on the grounds that the minor income rises to the peripheral expense. Nonetheless, it is bearing misfortunes since normal expense is higher than cost.
Thus, Firm C is encouraged to stay at the present degree of yield. It can close down over the long haul if misfortunes keep on happening. This is on the grounds that it can't increment or diminishing its yield as it will just alumni the misfortunes.
Firm D
Firm D is charging a cost of $35.90 for every unit. The normal expense is additionally 35.90 per unit. The minor income is $37.90 per unit and negligible expense is $37.90 per unit. The imposing business model firm is creating a benefit amplifying yield on the grounds that the minor income approaches the peripheral expense. Strangely, its cost is not as much as its negligible income which is beyond the realm of imagination.
Thus, Firm D has fouled up estimations with respect to its cost. Thoughtfully, the cost ought to consistently be higher than the minimal income or at most extreme it tends to be equivalent to minor income. It ought to return and recalculate the cost.
Firm E
The information identified with the minor income and minimal expense for Firm E isn't given. The cost charged is $35.00 per unit. The normal expense is at its base level and is equivalent to $33.00 per unit. This data isn't adequate to distinguish if the firm is working at a benefit boosting level.
Therefore, Firm E is encouraged to stay at the present degree of yield.
Firm A. Increase output; Firm B. reduces output; Firm C. remains at the current output level; Firm D. Option is E; and Firm-E. The Option is E.
What are Monopolies?
Firm-A
According to the tableland,firm-A is growing at the status where the (MC) Marginal Cost is smaller than the (MR) Marginal Revenue and also the price(P) is 3.90.
Hence,firm-A can different, extend presentation or outcome until the MC evolves equivalent to MR and reduce the price to sell more. In this process,firm-A will also maximize its full profit.
Thus, the recommendation for firm-A would be to raise output or option-b.
Firm-B
Notice that for firm-B the P is equal to MC. Therefore,firm-B is perhaps producing more than its profit-maximizing output where MC is equal to MR and P is greater than MC.
Thus, firm B can reduce the output of production and raise the price to enhance monopoly profit and produce at the point where MR=MC maximizes the total profit.
Hence, the recommendation for firm B is to reduce output or option-c.
Firm-C
Again based on the table,firm-C is producing where it's MR=MC and is therefore maximizing profit. It is producing a total output of 4000 and maximizing its total profit.
However, it has to charge a P per unit which is greater than both MR and MC such that the profit is maximized.
Thus, the recommendation for firm C is to remain at the current output level or option-a.
Firm-D
Firm-D is operating at the profit-maximizing point as noticed from the table that MR=MC but the P per unit of output charged by firm-D is less than both MC and MR and is earning 0 abnormal profit and only normal profit as P is equal to Average Total Cost(ATC).
Therefore,firm-D is charging a very less price at the profit-maximizing level which is less than both MR and MC, and observe that MC is also greater than ATC which is a bit unusual.
Thus, it is recommendable for firm-D to go back and recalculate your figures because the ones supplied can't possibly be right or option-e.
Firm-E
The ATC is at its minimum value for firm-E implying that MC is equal to ATC in this case.
Now the per unit output P charged by firm-E is 35 which is higher than the MC and the total output produced is 1000 units.
But we don't know whether this is the profit-maximizing output as data on MC and MR are missing.
Hence, it is recommendable for firm-E to go back and recalculate your figures because the ones supplied can't possibly be right or option-e to determine whether the existing output level is profit-maximizing or not.
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The Complete question here:
You are a self-employed profit-maximizing consultant specializing in monoplies. Five single-price, profit-maximizing monopolies are currently seeking your advice, and although the information they have supplied to you is incomplete, your expert knowledge allows you to go back and make a definite recommendation in each case. Select one of the following recommendations for each firm in the short run:
a. remain at the current output level
b. increase output
c. reduce output
d. shut down
e. go back and recalculate your figures because the ones supplied can't possibly be right
Firm P MR TR Q TC MC ATC AVC Recommendation
A 3.90 3.00 2000 7400 2.90 3.24
B 5.90 10000 5.90 4.74 4.24
C 9.00 44000 4000 9.00 11.90 10.74
D 35.90 37.90 5000 37.90 35.90
E 35.00 3990 1000 3300 at min value 23.94
2. All 10,000 firms in the last homework assignment were bought out by one company. How would pricing practices change? Give a numeric answer.