Question
In: Economics
The demand function for some product is given by Q = 100-10p. It costs $1 to...
The demand function for some product is given by Q = 100-10p. It costs $1 to produce one unit of this good and fixed costs of production are zero.
(a) Calculate equilibrium prices and industry output for two market structures: when this market is supplied by a large number of perfectly competitive firms and by a monopolist.
b) Now suppose that there are only two firms in this industry which compete in quantities. State the profit-maximization problem of each firm and and their optimum strategies. Calculate equilibrium price and output per firm.
Solutions
Rahul Sunny answered 5 months agoRelated Solutions
The demand function for a good is given as Q = 130-10P.
The demand function for a good is given as Q = 130-10P. Fixed costs associated with producing that good are €60 and each unit produced costs an extra €4.
i). Obtain an expression for total revenue and total costs in terms of Q
ii). For what values of Q does the firm break even
iii). Obtain an expression for profit in terms of Q and sketch its graph
iv). Use the graph to confirm your answer to (ii) and to...
Given the demand function Q = 100 - 10P, where P corresponds to price, do...
Given the demand function Q = 100 - 10P, where P corresponds to
price, do the following:
Plot the respective demand function. Be sure to label your
axes. For what price will Q = 0? When P = 0, what is Q?
Derive the expression for the own-price elasticity. Is the
own-price elasticity constant along all points on the demand curve?
What price range insures that the demand for Q is inelastic?
Derive the inverse demand function. That is,...
Suppose that the demand curve for wheat is Q= 120-10p and the supply curve is Q=10p...
Suppose that the demand curve for wheat is
Q= 120-10p
and the supply curve is
Q=10p
The government imposes a price ceiling p =$ 3 per unit.
a. How do the equilibrium price and quantity change? (round
quantities to the nearest integer and round prices to the nearest
penny)
The equilibrium quantity without the price ceiling is 60 and the
price without the price ceiling is $6.
The equilibrium quantity with the price ceiling is 30.
b. What effect does...
Suppose that consumer (retail) demand for a product is given by: Q=100−P, where Q is the...
Suppose that consumer (retail) demand for a product is given
by:
Q=100−P,
where Q is the quantity demanded and P is the price. The inverse
demand curve (which gives the price as a function of the quantity
demanded) is:
P=100−Q.
The marginal cost of production and average total cost of
production are $26 per unit, and the marginal cost of distribution
and average total cost of distribution are $10 per unit.
Suppose the retail distribution is monopolized by another
firm....
Consider a market with demand given by Q = 10p^−2 . A firm has a constant...
Consider a market with demand given by Q = 10p^−2 . A firm has a
constant MC = 2 with no other fixed costs. Use the Lerner Index
rule to answer the following questions.
1. (10 points) Suppose the government grants this firm an
exclusive monopoly in this market. Find the price-cost margin and
the profit-maximizing price.
2. (10 points) Suppose that, in addition to the firm's output,
the government always produces output QG = 2p^ −2 where p is...
Suppose that the market demand for expensive steak dinners is given by: Q = 1,000−10P, so...
Suppose that the market demand for expensive steak dinners is
given by:
Q = 1,000−10P,
so that the marginal revenue is:
MR = 100−0.2Q,
where Q is the number of steak dinners per day and P is the
price of a dinner. The marginal cost and average total cost are
both constant and equal to $40 per dinner.
Suppose that there is only one firm in the market.
The quantity that the firm produces will be how many
dinners?
The...
Suppose that the market demand for expensive steak dinners is given by: Q = 1,000−10P, so...
Suppose that the market demand for expensive steak dinners is
given by:
Q = 1,000−10P,
so that the marginal revenue is:
MR = 100−0.2Q,
where Q is the number of steak dinners per day and P is the
price of a dinner. The marginal cost and average total cost are
both constant and equal to $40 per dinner.
Suppose that there is only one firm in the market.
Suppose that a second firm that produces identical steaks and
has identical...
Suppose the demand function for a given product is q = 5,400 - 2p2, where p...
Suppose the demand function for a given product is q = 5,400 -
2p2, where p is the price in dollars.
Find the price interval(s) where demand is elastic:
Find the price interval(s) where demand is inelastic:
show work
Consider an industry with market demand Q=550-2p and market supply Q=100+10p. Determine the equilibrium price and...
Consider an industry with market demand Q=550-2p and market
supply Q=100+10p. Determine the equilibrium price and quantity.
Suppose the govrenment imposes a tax of $6 per unit to be paid by
consumers. What is the impact on equilibrium price and quantity?
What if the sales tax is paid by the seller instead of the
buyer?
Suppose that demand is instead given by Q=280-2p.
a) Show that the equilibrium levels of p and q are the same as
in the initial...
1. The demand function for the Baye Firm is: P = 100 – 0.5 Q The...
1. The demand function for the Baye Firm is: P = 100 – 0.5 Q
The firm’s total cost function is: 1500 – 10 Q + 0.5Q2
(a) Is this a perfectly competitive firm? (5 Points)
(b) Find the output level and price at which the firm’s total
revenue is maximized. (10 Points)
(c) Find the output level and price at which the firm’s total
profit is maximized. (10 Points)
(d) Is demand elastic, unitary elastic, or inelastic at the...
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