Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 15, Problem 8PA
Subpart (a):
To determine
Profit maximization.
Subpart (b):
To determine
The demand, marginal revenue and marginal cost curves.
Subpart (c):
To determine
Evaluate the shortage.
Subpart (d):
To determine
Evaluate shortage.
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Why is the level of output at which marginal revenue equals marginal cost the profit-maximizing output?
Henry Potter owns the only well in town that produces clean drinking water. He faces the following demand, marginal revenue, and marginal cost
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1
Demand:
P=100-Q
Marginal Revenue: MR 100-20
Marginal Cost:
MC=10+Q
On the following graph, use the blue line (circle symbol) to graph Mr. Potter's demand curve. Then, use the black line (cross symbol) to graph his
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symbol) to indicate the profit-maximizing price and quantity.
Price (Dollars)
110
100
90
NO
70
60
50
30
-20
30
40
60
60
-70
-60
90
110
30
50
70 80 90
Quantity (Units)
Demand
MR
MC
*
Profil-Maximization
The profit-maximizing quantity is
units, and the profit-maximizing price is $
(?)
Mayor George Bailey, concerned about water consumers, is considering a price ceiling that is 10% below the monopoly price.
At this new price, the quantity demanded would be
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The diagram depicts the cost curves and the marginal revenue curve of a price-taking firm that produces cherries. Identify each
item in the graph of this cherry producer. There are more labels than boxes, The average total cost (ATC), marginal cost (MC),
and marginal revenue (MR) curves are already labeled.
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$
ATC
MC
MR
PM
BAM
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Answer Bank
ATC at the profit-maximizing
output
profit-maximizing output
minimum ATC
Quantity of cherries
2.heic
output at the minimum ATC
market price
losses.
Chapter 15 Solutions
Principles of Microeconomics (MindTap Course List)
Ch. 15.1 - Prob. 1QQCh. 15.2 - Prob. 2QQCh. 15.3 - Prob. 3QQCh. 15.4 - Prob. 4QQCh. 15.5 - Prob. 5QQCh. 15 - Prob. 1CQQCh. 15 - Prob. 2CQQCh. 15 - Prob. 3CQQCh. 15 - Prob. 4CQQCh. 15 - Prob. 5CQQ
Ch. 15 - Prob. 6CQQCh. 15 - Prob. 1QRCh. 15 - Prob. 2QRCh. 15 - Prob. 3QRCh. 15 - Prob. 4QRCh. 15 - Prob. 5QRCh. 15 - Prob. 6QRCh. 15 - Prob. 7QRCh. 15 - Prob. 8QRCh. 15 - Prob. 1PACh. 15 - Prob. 2PACh. 15 - Prob. 3PACh. 15 - Prob. 4PACh. 15 - Prob. 5PACh. 15 - Prob. 6PACh. 15 - Prob. 7PACh. 15 - Prob. 8PACh. 15 - Prob. 9PACh. 15 - Prob. 10PACh. 15 - Prob. 11PACh. 15 - Prob. 12PA
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