Demand Chart
Not what you're looking for?
The graph below represents the monthly demand for a specialized laser-cutting tool. Assume that there is only 1 firm in the world that manufactures this laser tool. Its marginal and average cost curves are shown. Answer the questions below based on this information.
a)Draw the firm's marginal revenue schedule.
b)What is the price that leads to the highest level of profits for this firm?
c)Show the area on the graph that represents the above normal profits earned at the profit maximizing price output combination.
d)Is this market a "natural monopoly?" Explain you answer.
e)Is the minimum efficient scale of production large relative to the market, absolutely large or both relatively& absolutely large?
f)What does your answer to (e) suggest about the height of barriers to entry?
g)If threatened with entry, how would this firm's pricing strategy likely change?
Purchase this Solution
Purchase this Solution
Free BrainMass Quizzes
Economic Issues and Concepts
This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.
Economics, Basic Concepts, Demand-Supply-Equilibrium
The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.
Elementary Microeconomics
This quiz reviews the basic concept of supply and demand analysis.
Pricing Strategies
Discussion about various pricing techniques of profit-seeking firms.
Basics of Economics
Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.