Chapter 9 Supplemental
Questions
Question 1.
Units of
Variable Input
Price/Unit
1
2
2
2.5
3
3
5
4.5
8
6
Total Cost of
Input
Marginal
Input Cost
A. Calculate the total input cost and the marginal input
cost.
B. If the marginal value or marginal revenue products
were 4, what would be the profit maximizing level of
input?
Question 2.
A. Find the equilibrium price and quantity for a monopsonist in
the graph below.
B. Find the equilibrium price and quantity under perfect
competition in the graph below.
C. What is the magnitude of monopsonistic exploitation?
$/unit
MIC
Supply of
Input
8
5
MVP or MRP
3
10
15
Quantity per unit of time
Question 3.
On the following graph, show the effect of a lump-sum
tax on a monopolist.
MC
ATC
MR
D
Quantity per unit of time
Question 4.
Using the graph below, answer questions a through d.
A. What are the profit-maximizing price and quantity levels for the
monopolist?
B. Calculate profit.
C. Suppose the government imposes a price ceiling of $40. Now what
is the optimal price and quantity combination?
D. Calculate the new level of profit.