6) Faced with 2 distinct functions Q1 =24- 0.2P1 ; Q2 = 10 – 0.05P2 & TC =35 + 40Q where Q= Q1 + Q2 What prices and quantities will the firm set a) with discrimination? b) Without discrimination? Find the profit earned in each case .Use MR=MC method to maximize profit and check second order conditions.

6) Faced with 2 distinct functions Q1 =24- 0.2P1 ; Q2 = 10 – 0.05P2 & TC =35 + 40Q where Q= Q1 + Q2 What prices and quantities will the firm set a) with discrimination? b) Without discrimination? Find the profit earned in each case .Use MR=MC method to maximize profit and check second order conditions.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

8. A monopolist with cost function c(q) = q faces two consumers whose demand functions are given below. Q₁ = 100-P 50-P Q₂ (a) Suppose the monopolist is a uniform pricing firm (i.e.the monopolist can- not engage in any price discrimination). Find the firm's optimal pricing strategy. Calculate the firm's Lerner index. (b) What is the deadweight loss associated with this pricing strategy, if any? (c) Now, assume that price discrimination is possible. Find the monopolist's optimal second degree price-discrimination strategy. (d) Find the monopolist's optimal third degree price-discrimination strategy.
Determine the profit-maximizing LOADING... prices when a firm faces two markets where the inverse demand curves are Market A: pA=120−2QA, where demand is less elastic, and Market B: pB=80−0.5QB, where demand is more elastic, and Marginal Cost=m=20 for both markets. Part 2 For Market A: pA=$enter your response here. (Round your response to two decimal places.) Part 3 For Market B: pB=$enter your response here.
A computer hardware firm sells both laptop computers and printers. Through the magic of focus groups, their pricing team determines that they have an equal number of three types of customers, and that these customers' reservation prices are as illustrated in the figure below. Customer A Customer B Customer C and a price for printers of Laptop $750 $950 $650 Assume for simplicity the marginal cost of production for laptops and printers is zero. If the firm were to charge only individual prices (not use the bundle price), what prices should it set for its laptops and printers to maximize profit? Assuming for simplicity that the firm has only one customers of each type, how much does it earn in total? To maximize profit using individual prices, the firm should charge a price for laptops of P= 650 P= 100 Printer $100 $50 $150 Bundle $850 $1,000 $800 (Enter your responses as whole numbers.) In turn, profit is = $ 2150 (Enter your response as a whole number.) After conducting a costly study,…
On the graph input tool, change the number found in the Quantity Demanded field to determine the prices that correspond to the production of 0, 6, 12, 15, 18, 24, and 30 units of output. Calculate the total revenue for each of these production levels. Then, on the following graph, use the green points (triangle symbol) to plot the results. Calculate the total revenue if the firm produces 6 versus 5 units. Then, calculate the marginal revenue of the sixth unit produced. The marginal revenue of the sixth unit produced is________. Calculate the total revenue if the firm produces 12 versus 11 units. Then, calculate the marginal revenue of the 12th unit produced. The marginal revenue of the 12th unit produced is_________.
4. Consider a market where every firm and every potential entrant has the iden- tical cost function C(q) = 3q³-6q² +6q. (a) Find the firm's inverse supply function. (b) Suppose the market demand function is given by QP (P) = 20-2P. Find the long-run equilibrium price, quantity, and the number of firms. (c) Suppose the demand function suddenly becomes perfectly inelastic at quan- tity Q = 7. Find the long-run equilibrium price, quantity and the number of firms. (d) Suppose the demand becomes perfectly inelastic at quantity Q = 7, and the government decides to collect a per unit tax t = 4 from the producers for every unit of the good they sell. Find the long-run equilibrium price, quantity and the number of firms.
= 72 - 292. = 2 Suppose demand for good 1 is given by p₁ 26 – 3¹ and demand for good 2 is given by p2 The firm has the cost function C = 120 + q² for both goods where q 91 +92. Compute the following = • The profit maximizing level of output for each good, i.e., 91 and 92. ● Verification that the quantities obtained in the first bullet will indeed maximize profit • The prices p₁ and P2 that the firm will charge for each good to maximize profit
2. Acme Pharmaceutical Company discovers a vaccine that prevents the common cold and has a patent that grants it a monopoly on this drug. Acme has plants in both the North America and Europe and can manufacture the drug on either continent at a marginal cost of $10. Assume there are no fixed costs. In Europe, the demand for the drug is QE = 70 - PE, where QE is the quantity demanded when the price in Europe is PE. In North America the demand for the drug is QN 110 PN, where QN is the quantity demanded when the price in North America is PN =
1 Mario owns a wood-fired pizza shop which imitates traditional Italian methods. She uses a unique sauce that attracts a loyal following of customers. The demand for her pizzas is q = 1650 – 250p, and her costs are TC 0.72+0.0035q. q is the number of pizzas sold per week, TC(q) is Maria's weekly total cost, and p is the price of a pizza. a) What price and output will Maria choose to maximize profits? b) Maria returns to college and asks her cousin Victor to manage her pizza business. Victor faces the same demand and cost conditions as Maria, but he decides to maximize revenue. What price and output should he choose?
AmonopolysellsitsproductinboththeU.S.andJapanese markets. The American inverse demand function is PUS = 100 – QUS, and the Japanese inverse demand function is PJ = 80 – QJ. PUS and PJ are both measured in dollars. The firm’s marginal cost is MC = 20 in both countries. Suppose the company can prevent resales between these two countries. In order to maximize its profit, what prices should the monopoly firm charge in the two markets?
Suppose you own a tax preparation services company, with fixed costs of $3,000/month and marginal costs of $25/appt.If the price is $60/appt, 500 appointments would be sold. If the price is $50/appt, 760appointments would be sold. a.)Use these figures to calculate the price elasticity of demand for your services. b.)Calculate the monthly profits and profit margins (profit/revenue) associated with the price of $60/appt and $50/appt. c.)Given these calculations, what price should you charge for your services, $50/apptor $60/appt? Explain
The market demand function for birthday cards in Greenwich Village is: P = 100 − 10Q. The total cost function for producing birthday cards is: C= 60 + 20q. Suppose that a firm can perfectly price discriminate (i.e. conduct first-degree price discrimination). How much will its profits be? - How would I start this question?
The perfectly competitive market for widgets is determined as 10 firms with identical cost function and market demand as follows, C(qi) = 500 + 1qi2 − 5qi, Qd(p) = 485 − 2p.4 (a) Find the perfectly competitive market price and quantity, and each firm’s profit. (b) Calculate the total amount any one of the ten firms would be willing to pay to ensure monopoly power (rent-seeking activity).