2. Suppose that the pizza market is monopolized by Domino's. Domino's has 100 identical plants to run, each with the same cost function as before, TC = 81 + 2q + q². The market demand is also the same as before QD = 1500-30P (a) What is Domino's revenue function? (b) What is Domino's profit maximizing level of output? What price does Domino's set to sell this level of output? (c) What is the profit earned at each one of Domino's plants?

2. Suppose that the pizza market is monopolized by Domino's. Domino's has 100 identical plants to run, each with the same cost function as before, TC = 81 + 2q + q². The market demand is also the same as before QD = 1500-30P (a) What is Domino's revenue function? (b) What is Domino's profit maximizing level of output? What price does Domino's set to sell this level of output? (c) What is the profit earned at each one of Domino's plants?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Part C D
4. Your firm produces a computer software called "Model It", which is sold to other businesses. Its demand has been estimated to be: QM = 550- 4PM +1.5PS - 2.SI, where, QM denotes units sold of "Model It" software, PM denotes "Model It's" price, Ps denotes the price of a best-selling competitor, and I is the average income of its consumers. a. Currently, PM = $110, Ps= $152, and I = 60. What is the estimated quantity demanded (QM) for "Model It" software? b. What is the change in QM that results from a one unit ($1) change in the PM? C. Holding the values Ps= $152 and I = 60 equal, state the demand function for "Model It" in the format QM = ao + a₁PM and its demand curve (inverse demand function) PM = a - bQM. d. Assume that the price of the competitor's product (Ps) changes from $152 to $172 and that I is still $60, state the new demand function for "Model It" (the format should be QM = αo + α1PM) and its (inverse) demand curve (PM= a - bQM).
7. You are the manager of a firm that produces products X and Y. You know the following reservation prices: Consumer 1 2 3 Product X 90 70 40 Product Y 60 140 160 a. What are your profits if you charge 40 for product X and 60 for product Y? b. What are your profits if you charge 150 for a bundle containing one unit of product X and one unit of product Y? c. What are your profits if you charge 210 for a bundle containing one unit of X and one unit of Y, but also sell the products individually at a price of 90 for X and 160 for Y?
Using the table for a firm (NOTE: You should use the rule of profit maximization), Price (S) Q (Demand) TR 26 1 22 2 18 3 14 10 6 4 5 6 TC 26 34 44 56 70 86 MR ΝΑ MC ΝΑ 15. Complete the table. 16. Using the table, draw the demand curve, MR curve, and MC curve in one diagram. 17. Determine the output and price of the profit-maximizing firm. (NOTE: you should explicitly use MR, MC for profit-max condition.) 18. Why can the firm not charge higher than the price you choose in #17? 19. Determine the profit of the proft-maximizing firm. 20. Determine the profit of the proft-maximizing firm in the long run.
2. Monopoly, Practice Question Firm P is a monopolist for a new drug that makes people feel thinner. the total cost function is C(Q) = 200 + 10Q + Q² The inverse demand function is p(Q) = 82 - Q (a) By how much do revenues increase if this firm sells one more (small) unit of output? By how much does its cost go up if it produces one more (small) unit of output? (b) What is the optimal price and quantity the monopolist should charge and sell? (c) What is the profit the monopolist makes? Should the firm shut down in the short or long run? (d) If the company increases its price by a small fraction (let us say 1%), by what proportion does demand go down? [Round to two decimal places.] (e) What percentage of the price is due to costs and what is due to markup? [Round to two decimal places.] (f) What is the deadweight loss of the monopoly pricing compared to competitive prices?
3). DOORDASH How can Data Analytics Improve the advantages DoorDash has on the competition Include such economic ideas such as the Three Inputs we discuss, the Idea of R&D in this process What are two fixed costs for DoorDash and two Variable Costs? What are three Barriers to Entry that limit Perfect Competition in this industry? What are the Determinants of Supply in Economics and how do two of them relate to DoorDash?
4. Suppose a manufacturer and its retailer face the problem of double marginalization described in my notes, Section 11.1. If the manufacturer sets the wholesale price equal to its marginal cost c and in addition, requires the retailer to pay a fraction a (between 0 and 1) of its profit. Write down the retailer's profit maximization problem. Will this practice solve the double marginalization problem? (That is, will this 4.a practice maximize their joint profit?) 4.k Suppose the retailer is required to pay a fraction of a of its sales (i.e., total revenue). Write down the retailer's profit maximization problem. Will this practice solve the double marginalization problem?
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Suppose a perfectly competitive industry can produce a product with total cost TC = 30 and the market demand for the product is given by Q = 120- Suppose that the same market can be served by a monopolist operates with the same cost and demand functions. How does the consumer surplus change due to monopoly relative to perfect competition? O It falls by 3600 It does not change OIt falls by 6000 It falls by 4800
2. The revenue function of a firm producing one product is given by r = 1000q2q2, where q denotes the demand for the product. a. Determine the domain of r(q). b. Determine the range of r(q). c. For which demand(s) q is the revenue of the firm equal to 0? d. Draw the graph of the revenue function.
3. A monopolist who is the exclusive producer of cricket bats in the UK faces a demand curve defined by P = 100 – 2Q and a short-run total cost curve of TC = 300 + 20Q. a. Given the above information, compute total revenue, marginal revenue, and marginal cost for this producer, and identify the optimal quantity, the optimal profit, and the equilibrium price. [10 marks] b. Considering the information from your answer to bullet point a., represent the monopoly market structure graphically. [5 marks]