Week 7-9

Question 1

What is an isoprofit curve?

Answer 1

A curve that joins togethr all of the combinations of price and q that give an equal level of profit

Can be described as the firms indifference curve

Question 2

Where should a profit maximising firm produce? I.E how should they set P and Q

Answer 2

Where their isoprofit curve meets the demand curve

Question 3

What is the different between economic profit and normal profit?

Answer 3

Economic profit is additional profit above covering costs.

Normal profit is enough to cover costs; these include return per dollar paid to shareholders to induce them to hold shares

Question 4

In terms of a firm, what is their feasible set?

Answer 4

All points on or below the demand curve

Question 5

What isoprofit curve is the AC curve equivalent to?

Answer 5

The zero-profit curve

Question 6

How do you find the profit maximisation point graphically?

Answer 6

Plot the marginal revenue at different Q and P, join together, and see where MC = MR

Question 7

See other cards for Monops, Oligops, Monopolistic comp, Natural