Based on the best available econometric estimates, the market elasticity of demand for your firm's product is -1.5. The marginal cost of producing the product is constant at $150, while average total cost at current production levels is $215. Determine your optimal per unit price if: Instructions: Enter your responses rounded to two decimal places. a. you are a monopolist. $ 450 b. you compete against one other firm in a Cournot oligopoly. $ 225 c. you compete against 19 other firms in a Cournot oligopoly. $ 145

Based on the best available econometric estimates, the market elasticity of demand for your firm's product is -1.5. The marginal cost of producing the product is constant at $150, while average total cost at current production levels is $215. Determine your optimal per unit price if: Instructions: Enter your responses rounded to two decimal places. a. you are a monopolist. $ 450 b. you compete against one other firm in a Cournot oligopoly. $ 225 c. you compete against 19 other firms in a Cournot oligopoly. $ 145

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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You are managing a firm with market power, and you think the price elasticity of demand for your product is between 1.3 and 1.5. You estimate that your marginal cost is between $55 and $70. The price that you should set would range between $ and $. (Round your answers to two decimal places.) If you refine your estimate of the marginal cost to $80, the price you should set would now range between $ and $ (Round your answers to two decimal places.)
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Based on the best available econometric estimates, the market elasticity of demand for your firm's product is -2.0. The marginal cost of producing the product is constant at $75, while average total cost at current production levels is $140. Determine your optimal per unit price if: Instructions: Enter your responses rounded to two decimal places. a. you are a monopolist. $ b. you compete against one other firm in a Cournot oligopoly. $ 139 * c. you compete against 19 other firms in a Cournot oligopoly. S 130
Give explanation of the correct option and explanation of the incorrect options. Note: Dear expert hand written is not allowed.
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A city has two newspapers. Demand for either paper depends on its own price and the price of its rival. Demand functions for papers A and B respectively, measured in tens of thousands of subscriptions, are 21-2Pa + Pb and 21 + Pa-2Pb The marginal cost of printing and distributing an extra paper just equals the extra advertising revenue one gets from another reader, so each paper treats marginal costs as zero. Each paper maximizes its revenue assuming that the other's price is independent of its own choice of price. If the papers enter a joint operating agreement where they set prices to maximize total revenue, by how much will newspaper prices rise? (a) 3 (b) 2 (c) 0 (d) 3.5 (e) 2.5
Answer choices are first blank: negative, positive, zero second blank: an equal number of, fewer, more
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