Sol-Motors is the only auto manufacturer in West Lidia, a country that prohibits the importation of cars. The graph below shows the demand and the costs for Sol-Motors. nues (in thousands) 30 27 24 21 18 MC D Tools MR

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Sol-Motors is the only auto manufacturer in West Lidia, a country that prohibits the importation of cars. The graph below shows the
demand and the costs for Sol-Motors.
Costs and revenues (in thousands)
33
30
27
24
21
18
15
12
45 75 105,
30 60 90
Quantity per period (in thousands)
15
MC
D
120135150165
Tools
Saved
MR
Hell
Transcribed Image Text:4 eBook Print References Study Problem Sol-Motors is the only auto manufacturer in West Lidia, a country that prohibits the importation of cars. The graph below shows the demand and the costs for Sol-Motors. Costs and revenues (in thousands) 33 30 27 24 21 18 15 12 45 75 105, 30 60 90 Quantity per period (in thousands) 15 MC D 120135150165 Tools Saved MR Hell
a. Add the marginal revenue curve to the graph above (starting at zero). Plot only the end points.
b. What are Sol-Motors' profit-maximizing output and price?
Output:
thousands
Price: $
thousands
c. Suppose that the government of Lidia imposes a price ceiling of $9,000 per car. What is the firm's profit-maximizing output now?
Profit-maximizing output:
d. What would be the output if the graph represented a perfectly competitive industry rather than a monopoly?
Output:
thousands
thousands
Transcribed Image Text:a. Add the marginal revenue curve to the graph above (starting at zero). Plot only the end points. b. What are Sol-Motors' profit-maximizing output and price? Output: thousands Price: $ thousands c. Suppose that the government of Lidia imposes a price ceiling of $9,000 per car. What is the firm's profit-maximizing output now? Profit-maximizing output: d. What would be the output if the graph represented a perfectly competitive industry rather than a monopoly? Output: thousands thousands
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