There are four essay questions for this final examination. Answers of at a least a full page are...

Question

There are four essay questions for this final examination. Answers of at a least a full page are required for each and are to be presented in APA format. All opinion must be clearly supported by material covered in the course or in additional scholarly articles of your choice.

QUESTION #1

Construct a tutorial that shows users of it how to apply marginal cost and marginal revenue concepts to business operations with the goal of maximized profitability.

QUESTION #2

A public park in your area has become badly polluted by trash that users of it leave behind. What economic concept describes this? How can economic incentives be used to significantly reduce the problem?

QUESTION #3

Suppose that all countries remove restrictions on monopolies. What are the potential economic advantages of this? What are the potential disadvantages?

QUESTION #4

The Trump administration has asked you to develop a new trade agreement between the U.S. and Asian countries. In order to maximize economic benefits to all parties, what features would you include?

David · Accepted Answer

Profit Maximization using Marginal Cost and Marginal revenue concepts 
Before understanding how a business can maximize profits using the concepts of 
marginal cost and marginal revenue, it is imperative that the concepts first be discussed. 
Marginal cost is the increase in Total cost due to the increase in production by a single unit. 
Marginal revenue on the other hand is the increase in total revenue due to the sale of an 
additional single unit. 
Profit is generally maximized at the stage where the Marginal cost equals Marginal 
revenue.  This strategy is based on the fact that total profit reaches its maximum point where 
marginal revenue becomes equal to marginal profit. This is because a firm will continue to 
produce the goods till the point where marginal profit becomes zero. It is to be noted that 
Marginal profit is the difference between Marginal Revenue and Marginal cost of a product.  
The relationship can be understood with the help of an example. Suppose a firm 
produces 1 unit of a product and finds that producing the second unit of the product will 
entail a cost of $10 while the same can be sold for $20, the firm will produce this additional 
unit since the profits will increase with the production of this additional unit.  
Suppose, at the 4
th
 unit, the firm finds that the Marginal cost of production of that unit 
is $20 while the Marginal revenue is also $20, it will halt production at this point. Beyond 
this point the marginal costs will be more than the marginal revenue and if the firm produces 
these units, it will lose its profits (Lipsey, & Harbury, 2004).  
Profits will be maximized at the point where the Marginal revenue is just equal to 
marginal cost adding nothing more to profits. Till this point, every unit of production is 
increasing its profits. Till this point, for every unit of production, the marginal cost is lesser 
than the marginal revenue thus increasing profits. If the firm produces any lesser than this 
point, it is foregoing the chance to earn additional profits from an extra unit of production. 
However, if it produces any further, the Marginal cost will exceed the additional revenue 
from this unit and the profits will decline.
Reference 
Lipsey, R., & Harbury, C. (2004). First principles of economics (1st ed.). Oxford: Oxford 
University Press.
Economic Incentives for avoiding misuse of Public goods 
The Public good and welfare Economics concept best describes the misuse of the 
public park.

There are four essay questions for this final examination. Answers of at a least a full page are required for each and are to be presented in APA format. All opinion must be clearly supported by...

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