Term
How do you calculate profit maximizing output?
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Definition
Set Marginal Cost Equal to Marginal Revenue and solve for Quantity
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Term
How do you calculate the price when provided with the marginal revenue, marginal cost, and demand function?
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Definition
1.)Solve for Profit Maximizing Output
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2.)Insert Profit Maximizing Output as the Output of the Demand Function and solve for price.
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Term
How do you calculate Economic Profit?
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Definition
(Price*Quantity)-(Total Cost)
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Term
When is demand of a monopoly unit elastic?
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Definition
When Marginal Revenue is Equal to Zero
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Term
How do you calculate price elasticity of demand using the algebraic formula?
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Definition
(Slope)*(Price/Quantity Demanded)
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Term
Are monopolies ever allocatively efficient?
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Definition
No, because monopolies set price greater than marginal costs, which means the market can never be productively efficient.
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