Consider the following model of a monopolistic form, where P is the sale price of the good, MC is marginal cost of producing the good and q is quantity produced (assumed equal to quantity sold) the firm has to sell all units of the good at the same price. p=10-2q MC=2+q If the firm produces 3 units, how much profit will it make? a. £3 b. £11.25 c. £1.50 d. £24

Consider the following model of a monopolistic form, where P is the sale price of the good, MC is marginal cost of producing the good and q is quantity produced (assumed equal to quantity sold) the firm has to sell all units of the good at the same price. p=10-2q MC=2+q If the firm produces 3 units, how much profit will it make? a. £3 b. £11.25 c. £1.50 d. £24

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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PTICE and COST $40 30 23 20 10 MC ATC ATC MR AR=D 150 200 Quantity per day 0:13 Question 11 (10 points) (Exhibit: Profit Maximization for a Firm in Monopolistic Competition) Suppose that an innovation reduces a firm's fixed costs and reduces cost from ATC to ATC' Before the innovation reduced the cost, the firm's maximum economic profit was: $0. $30. $750. $4,500.
(a) Does a monopolistically competitive firm have an incentive to produce at the level of output that minimizes the average total cost at the long run equilibrium? Explain with a diagram. (b) Suppose CLP Holdings Limited is a natural monopolist with constant marginal cost. Draw a diagram to indicate the profit-maximizing level of output, the profit-maximizing price, and the size of the profit. If the government wants to increase the market efficiency through price regulation, would you suggest the government setting the price equal to the firm’s marginal cost or its average total cost? Explain in detail with the diagram in part (i).
2.7 Your marketing research department has estimated the demand for your firm's product to be Q=10,000 100P and the marginal revenue to be MR 100 .02Q = If marginal cost and average total cost are constant at $40, 1. How much would you produce? The quantity you should produce is 3,000 units 2. What price would you charge? I would charge $70 3. How much economic profit would your firm earn? $90,000 4. Illustrate your answers to parts a through c in a diagram.
!!! Draw a Graph!!! Consider the monopolistic competition model (with the CC and PPcurves). Suppose:a. S = 100b. b = 1c. c = 2d. F = 10Solve for the equilibrium number of firms n and the price, P.Now suppose c falls to 1. Solve for the new number of firms, n, and the new price, P.Tell a story for what happens.
Please Answer all subparts with explanation. I will really upvote. Don't copy paste. Thanks
Monopolistic Competition Consider the folowing graph, (graph 1) for the short run equilibrium for a monopolisticaily competitive firm producing printers for commercial operations. Graph1 $ Price per unit P1 ATC MC P2 Pa D3 D2 D3 Q2 Qu Q3 Quantity MR2 MR. The following information is given: D1 = $35,000- $15Q TC = $550,000+ $1,000Q+ $10Q? Answer the following and referring to the relevant elements of graph 1 above and show all workings. (a) Calculate price output and profit for the short run equilibrium (show all workings). (b) Calculate price, output and profit for the long run equilibrium (with and without product differentiation) (show all workings). (c) Is the market allocatively efficient in the short run or long run (why or why not?). (d) Is the market productively efficient in the short run or long run (why or why not?).
MONOPOLISTIC COMPETITION 1. Suppose that the cost of production is given by the following function: CT = 100 + Q2 and that the demand is given by P = 80 - Q. a. Determine the level of maximization.b. Determine the value of CT and ITc. Check that the IMg = CMg CT (Total cost) IMg (marginal income) CMg (marginal cost) Algebraically if the demand curve in the monopoly is a function of quantity, the demand curve is a straight line. P = a - bQWhere a is the ordinate to the origin, b the slope and Q the quantitySo if IT = P x QWe have that (a - bQ) Q = aQ - bQ2IT = aQ - bQ2And therefore the marginal income is the derivative of IT or what is equal to the variation of total income between the variation of the quantity.Therefore the IMg = derive the quantity in the function aQ - bQ2IMg = a - 2bQ Consider these functions when conducting monopoly exercises.
3. A monopolistically competitive firm sells boots and has the following in the short run: Demand: P = 80 – 0.5Q %3D MR: MR = 80 – Q TC = 1.5Q? + 40 1.5Q + (40/Q) TC: АТC: MC: MC = 3Q %3D Find the firm's profit maximizing quantity and price. Find the firm's profit or loss. Show some work here: Quantity = Price = Profit or Loss = (circle one, and write the number)
I know that profit maximization for both a competitive and monopolistic market is MC=MR, however MR=P is applicable only in a competitive market and this is a monopoly. How do I solve this?
Q2: You have a small decoration business primarily making custom paper mache pinata's. Monopolistic Competition. Each customer has unique custom order, therefore it is very difficult to figure out the marginal cost of each output. You charge a price of $15 for any small two foot by two foot pinata's. Without marginal cost, how can you check to see if the small pinata's were profitable?