If this monopolistic firm's marginal cost is constant at $30, itsprofit maximizing output is: (Hint: Demand is linear (P-a-bQ)implying that the MR curve's slope is twice the demand curveslope; find the demand curve and then the MR curve.)Price$70$50$30$1010 20 30 4050 units.40 units.20 units.30 units.Demand50 60 70 Quantity

A monopolistic firm represents a market structure where a single company holds significant control…

Answered: If this monopolistic firm's marginal…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Exercise 3.8. Dayna's Doorstops, Inc. (DD) is a monopolist in the doorstop industry. Its cost is C = 100 - 5Q + Q², and demand is P = 55 - 2Q. a) What price should DD set to maximize profit? What output does the firm produce? How much profit and consumer surplus does DD generate? b) What would output be if DD acted like a perfect competitor and set MC = P? What profit and consumer surplus would then be generated? c) What is the deadweight loss from monopoly power in part (a)? d) Suppose the government, concerned about the high price of doorstops, sets a maximum price at $27. How does this affect price, quantity, consumer surplus, and DD's profit? What is the resulting deadweight loss? e) Now suppose the government sets the maximum price at $23. How does this decision affect price, quantity, consumer surplus, DD's profit, and deadweight loss? f) Finally, consider a maximum price of $12. What will this do to quantity, consumer surplus, profit, and deadweight loss?
A shoe store in a monopolistically competitive market has a demand curve for their shoes given by P = 81-0.5Q. The variable costs of producing a shoe are given by the equation VC = Q2 + 3Q and so the marginal costs are MC = 20 +3. a) What is the shoe store's profit - maximizing output and price? If the shoe store is in a long-run equilibrium, what must its fixed costs be?
The diagram at right shows the structure of cost and demand facing a monopolistically competitive firm in the short run. The profit-maximizing output level is units of output. (Enter your response as an integer.) The profit-maximizing price is $. (Enter your response as an integer.) Total revenue is $ (Enter your response as an integer.) Total cost is $. (Enter your response as an integer.) Total profit or loss is $ (Enter your response as an integer and include a negative sign where appropriate.) In the long run, firms will OA. exit, shifting the demand facing the remaining firms to the right until the firms earn an economic profit. B. exit, shifting the demand facing the remaining firms to the right until the firms earn a normal profit. OC. enter, shifting the demand facing the remaining firms to the left until the firms earn a normal profit. OD. enter, shifting the demand facing the remaining firms to the left until the firms earn an economic profit. $14 $13 $12 $11 $7 MR 15 20…
Answer choices are first blank: negative, positive, zero second blank: an equal number of, fewer, more
ABC Cosmetic is going to launch a new special cleansing cream for men. It has aconstant marginal cost of $30 and the estimated price elasticity of demand is –4/3.What price should ABC Cosmetic charge for the cream? Show your calculation.
A supply curve that is parallel to the horizontal axis suggests that: the industry is organized monopolistically. the relationship between price and quantity supplied is inverse. a change in demand will change price in the same direction. a change in demand will change the equilibrium quantity but not price.
Monopolistic competitive firms' profit maximization decisions are similar to those of a perfectly competitive firm. a monopoly firm. both monopoly and perfectly competitive firms. neither monopoly nor perfectly competitive firms.
A large corporation with monopolistic control in the marketplace has its average daily costs, in dollars, given by C = 500 x + 200x + x2. The daily demand for x units of its product is given by p = 450,000 − 100x dollars. Find the quantity that gives maximum profit.x = units
Consider the long-run equilibrium in a monopolistically competitive market. Which of the following alternatives is correct? (a) Price is equal to marginal cost (b) The equilibrium is cost-efficient: Firms produce at the minimum of the average cost curve (c) The equilibrium is welfare-efficient: There is no deadweight loss (d) There are no barriers to entry: Every firm earns zero profits
For each of the following characteristics, check which types of firm it describes: a monopoly firm, a monopolistically competitive firm, both, or neither. (Note: If the characteristic describes neither, leave the entire row unchecked.) Characteristic Monopoly Monopolistically Competitive Charges a price above marginal cost Equates marginal revenue and marginal cost Has marginal revenue that is the same as the price Faces the entry of new firms selling similar products Earns economic profit in the long run Produces the socially efficient quantity of output
Assume a firm engaging in selling its product and promotional activities in monopolistic competition face short-run demand and cost functions as Q = 20-0.5P and TC= 4Q2 -8Q+15, respectively. Having this information a) Determine the optimal level of output and price in the short run. b) Calculate the economic profit (loss) the firm will obtain (incur). c) Show the economic profit (loss) of the firm in a graphic representation.
Price and cost per unit MC X P3 P₂ Demand MR 0 Q₁ Q3 Q4 According to the figure above, what is the monopolistic competitor's profit-maximizing output? Q* P₁ Q3 units Q2 units Q4 units Q1 units ATC Quantity

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