use of that unusual shape? Fully explain why this type of ATC curve is likely to result in a natural onopoly, and draw a contrast between the ATC curve of a natural monopolist and that of a typical firi a competitive industry.

use of that unusual shape? Fully explain why this type of ATC curve is likely to result in a natural onopoly, and draw a contrast between the ATC curve of a natural monopolist and that of a typical firi a competitive industry.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Tangy Tangerines is a monopolistic firm in the market for tangerines. The following equations describe the demand for, and the cost of producing tangerines, where Q is output measured in thousand pounds, and P is price per pound. Demand: P 59-3Q Marginal Cost: MC = 3 + Q Total Cost: TC = 4 + 3Q+0.50² The monopolist will charge what price and earn what profit? Price $35 and Profit-$220 thousand. Price $19 and Profit $53 thousand. * Price $8 and Profit=$220 thousand. Price $19 and Profit= $14 thousand.
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7. Suppose that the inverse market demand for pumpkins is given by P = $10-0.050. Pumpkins can be grown by any- one at a constant marginal cost of $1. ena. If there are lots of pumpkin growers in town so that the pumpkin industry is competitive, how many pumpkins will be sold, and what price will they sell for? b. Suppose that a freak weather event wipes out the pumpkins of all but two producers, Linus and Lucy. Mesob 0 17050
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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.
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QUESTION 5 Consider the Cournot model of quantity competition. In the Nash equilibrium, firms always end up producing more than a monopolist would produce. O True O False
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1) With monopoly, we only specify long run cost functions because we are not as interested in the shut down decision and we don't have firm entry to compete away profit. Still, to make the math work, our monopolist cost functions often have fixed costs. Let's solve the following question: EagleSOFT has developed a computer program that will send UNT sports teams scores directly to purchaser's phones as text messages. Demand and total cost for the software company is described by the following equations: Demand: P = 70 -0.05Q, Cost: C = 4000 + - 10Q. a) What is the firm's level of output, the price they should charge, and their profit? b) What is the demand elasticity and Lerner index at the level of output?