Ellen's Painting Services is a perfectly competitive firm that currently paints 10 houses a month and charges $100 per house, which is the going market price
Ellen's marginal cost is positively related with the quantity of service she provides and is currently $120. What should Ellen do to increase her economic profit? Paint more houses? Raise her price? Explain your answer.
Ellen should decrease the number of houses she paints until her marginal cost equals the market price. This way she will maximize her profit. As a perfectly competitive firm, Ellen is a price taker and cannot raise or lower her price without losing profit.
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Nonlinear price discrimination is
A) perfect price discrimination. B) quantity price discrimination. C) group price discrimination. D) two-part pricing.
Producer surplus is the
a. area under the supply curve to the left of the amount sold. b. amount a seller is paid minus the cost of production. c. area between the supply and demand curves, above the equilibrium price. d. cost to sellers of participating in a market.