Figure 9.7 -Refer to Figure 9.7.Use the Figure Above to Answer the to Answer

question 8

Essay

Figure 9.7
-Refer to Figure 9.7.Use the figure above to answer the following questions.
a.What is the profit-maximising quantity and what price will the monopolist charge?
b.What is the total revenue at the profit-maximising output level?
c.What is the total cost at the profit-maximising output level?
d.What is the profit?
e.What is the profit per unit (average profit)at the profit-maximising output level?
f.If this industry was organised as a perfectly competitive industry, what would be the profit-maximising price and quantity?
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Distinguish between different standards (e.g., majority vote, economic efficiency) used to evaluate economic activities.

Understand the basic principles of supply and demand and how they relate to market equilibrium.

Differentiate between elastic and inelastic demand and supply and their impacts on tax burden distribution.

Recognize the differing economic philosophies of Keynes and Hayek regarding government intervention and central planning.

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Definitions:

Competitive Equilibrium

A market state where supply equals demand, and no economic actors have the incentive to change their behavior.

Demand Equals Supply

A market equilibrium condition where the quantity of a good or service demanded by consumers equals the quantity supplied by producers.

Numeraire

A unit of account or standard measure in economics used to compare the value of goods or services.

Pareto Optimal

Another term for Pareto Efficient; describes a situation where no one's condition can be improved without worsening someone else's condition.