Question

In: Economics

The following equations describe a firm’s demand, marginal revenue, total cost, & marginal cost: Demand: P...

The following equations describe a firm’s demand, marginal revenue, total cost, & marginal cost:

Demand: P = 1,000 – 10Q

Total Cost: TC = 500 + 10Q + Q^2

Marginal Revenue: MR = 1,000 – 20Q

Marginal Cost: MC = 10 + 2Q

a. What level of output should be produced to maximize profits?

b. What is the market price?

c. How much profit will be earned?

d. The firm sells cereal and competes with other firms selling slightly differentiated cereal products. What type of market is this firm operating in?

The following equations describe a firm’s total cost and marginal cost:

Total Cost: TC = 500 + 10Q + Q^2

Marginal Cost: MC = 10 + 2Q

e. If the firm is a price taker and other firms in the industry sell output at a price of $100, what price should the manager of this firm put on the product?

f. What level of output should be produced to maximize profits?

g. How much profit will be earned?

h. The firm sells orange juice, which is a perfect substitute, at a farmers market. What type of market is this firm operating in?

Solutions

Expert Solution

Rahul Sunny answered 6 months ago
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