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 $125, while average total cost at current production levels is $190. Determine your optimal per unit price if: Instruction: Enter your responses rounded to two decimal places. a. You are a monopolist. $ b. You compete against one other firm in a Cournot oligopoly. $ c. You compete against 19 other firms in a Cournot oligopoly. $

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 $125, while average total cost at current production levels is $190. Determine your optimal per unit price if: Instruction: Enter your responses rounded to two decimal places. a. You are a monopolist. $ b. You compete against one other firm in a Cournot oligopoly. $ c. You compete against 19 other firms in a Cournot oligopoly. $

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter13: best-practice Tactics: Game Theory

Section: Chapter Questions

Problem 1E

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Question

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 $125, while average total cost at current production levels is $190.

Determine your optimal per unit price if:

Instruction: Enter your responses rounded to two decimal places.

a. You are a monopolist.

$

b. You compete against one other firm in a Cournot oligopoly.

$

c. You compete against 19 other firms in a Cournot oligopoly.

$

Definition Definition Total cost of producing a certain quantity of a good, divided by the quantity produced. It is the sum of all costs (fixed and variable) required to produce one unit of output.

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