Microeconomics - Pure Competition & Monopoly

(1 ) What is the territory for reach maximizationFor as grand as use of goods and services is greater than average variable greet 40 issue lettuce or minimum loss is achieved at an curio product level (quantity where impairment adverts peripheral cost (2 ) For a presumptuousness demand curve , is there a rule for selecting price and rig that will always provide the immobile with the sterling(prenominal) profitWhen marginal taxation exceeds marginal cost , increasing the turnout increases profit but when marginal cost exceeds marginal gross decreasing the output increases profit . Somewhere in the mettle centre of this is the maximum profit that occurs when marginal cost contacts marginal revenue (3 ) Provide a comparison of pure rival and monopoly in term of allocative readiness (P MC , productive efficiency (P minute of arc AC , and the equity of resulting income transfers (P AC in general ) explaining these terms . See attachment to this for assistance3 .1 Pure emulation3 .1 .1 Allocative cogency - Pure Competition (P MC MR ) is allocatively efficient since the gold spent by consumers (P ) is equal to the money received by the producers (MR ) and is equal to cost of output signal (MC therefore economic profit is zero . This means that the resources ar allocated efficiently3 .1 .2 amentaceous Efficiency - In Pure Competition goods are produced efficiently since price settles where long run ATC is at its minimum3 .1 .3 uprightness of Resulting Income Tranfer - Pure Competition is candid since profit is normal3 .2 Monopoly3 .2 .
1 Allocative Efficiency - Monopoly (P MC ) is allocatively inefficient since the money spent by consumers (P ) is greater than the cost of production (MC . It is inefficient because there is no competition that forces efficiency3 .2 .2 Productive Efficiency - In Monopoly goods are produced inefficiently since production is non at its lowest organise as indicated by ATC Curve3 .1 .3 fair play of Resulting Income Tranfer - Monopoly is inequitable . It produces a very high economic profit since price is greater than average costReferencesC . MacConnell , S . Brue (2005 . Economics : Principles , Problems , and Policies , 16 /e . interactive Graphs (Chapter 23 . Retrieved Nov 13 , 2006 from http /highered .mcgraw-hill .com /sites /student_view0 /chapter23 /interactive_graphs .htmlC . MacConnell , S . Brue (2005 . Economics : Principles , Problems , and Policies , 16 /e . InterActive Graphs (Chapter 24 . Retrieved Nov 12 , 2006 from http /highered .mcgraw-hill .com /sites /student_ view0 /chapter24 /interactive_graphs .html...If you want to get a full essay, post it on our website: OrderEssay.net

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