Practise comparing profit, revenue and sales objectives and applying price discrimination, limit pricing, predation or leadership through cost-revenue diagrams and market evidence.
In the diagram
M C= marginal cost; A C= average cost; M R= marginal revenue; A R= average revenue.
What will be the output of a profit-maximising firm whose cost and revenue functions are shown above?
OW
OX
OY
OZ
A firm is operating at a level of output which corresponds to the point where MR=0.
What objective is the firm achieving?
maximising consumer surplus
maximising profit
maximising sales
maximising revenue
A bus company has a monopoly and specialises in long-distance travel. It initially sells its tickets to customers one month in advance of the journey. As the departure date approaches, the price of a ticket increases.
Which kind of pricing policy does the bus company operate?
minimum pricing
predatory pricing
price discrimination
price leadership