Perfect Competition and Monopoly Problems1. Suppose the typical firm in a perfectly competitive industry has the following long-run totalcost function:TC = 240Q – 6Q2 + 0.08Q*|What is the long-run price for product Q?2. Stanley Smith has a soft drink concession monopoly at Fort Tippecanoe, Indiana, CountyFair. He believes his total cost for supplying the drinks will beTC = 800 + 0.2Q + 0.0001Q?If the County Fair Board tells him he must charge $0.80 and demand for the drinks duringthe fair is given by the demand curveQ = 5000 – 2500Pdetermine the following:(a) The number of drinks sold and Stanley's total profit at the fixed price of $0.80 per drink.(b) Stanley's profit-maximizing output, price, and profit if he were allowed to set his ownprice instead of having to charge $0.80.

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1. Suppose the typical firm in a perfectly competitive industry has the following long-run total cost function: TC = 240Q – 6Q² + 0.08Qª| What is the long-run price for product Q?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Perfect Competition and Monopoly Problems
1. Suppose the typical firm in a perfectly competitive industry has the following long-run total
cost function:
TC = 240Q – 6Q2 + 0.08Q*|
What is the long-run price for product Q?
2. Stanley Smith has a soft drink concession monopoly at Fort Tippecanoe, Indiana, County
Fair. He believes his total cost for supplying the drinks will be
TC = 800 + 0.2Q + 0.0001Q?
If the County Fair Board tells him he must charge $0.80 and demand for the drinks during
the fair is given by the demand curve
Q = 5000 – 2500P
determine the following:
(a) The number of drinks sold and Stanley's total profit at the fixed price of $0.80 per drink.
(b) Stanley's profit-maximizing output, price, and profit if he were allowed to set his own
price instead of having to charge $0.80.

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