A brand has the exclusive right to sell Star Wars t-shirts in
Germany. The demand for...
A brand has the exclusive right to sell Star Wars t-shirts in
Germany. The demand for these t-shirts is Q = 70 – P.
• a. If brand can produce at constant average costs of AC = 6,
what output level will brand choose in order to maximize profits?
What is the price at this output level? What are the brand’s
profits? Show your result in the related graph.
• b. Assume instead that brand has a cost structure where
total costs are described by TC = 0.25Q2 – 5Q + 300 With the
monopolist facing the same market demand and marginal revenue, what
price quantity combination will be chosen now to maximize profits?
What will profits be? Show your result in the related graph.
• c. Assume now that a third cost structure explains the
brand’s position, with total costs given by TC = 13Q3 – 5Q2 + 5Q +
250 Again, calculate brand’s price-quantity combination that
maximizes profits. What will profit be? Show your result in the
related graph.
Solutions
Expert Solution
Given demand function: Q = 70 – P. The inverse demand function
would be P = 70 - Q. Since this brand has exclusive right to sell
t-shirts, so it is a monopoly. The equilibrium condition for a
monopoly is MC = MR.
LC Waikiki (LCW) has the exclusive right to sell Star Wars
t-shirts in Turkey. The demand for these t-shirts is Q = 70 – P.
Assume now that a third cost structure explains the LCW’s position,
with total costs given by TC = 1/3 Q 3 – 5Q 2 + 5Q + 250 Again,
calculate LCW’s price-quantity combination that maximizes profits.
What will profit be? Show your result in the related graph.
SallyMay, Inc., designs and manufactures T-shirts. It sells its
T-shirts to brand name clothes retailers in lots of one dozen.
SallyMay's May 2013 static budget and actual results for direct
inputs are as follows:
Static Budget
Number of T-shirt lots (1 lot1 dozen) 400
Per Lot of T-shirts:
Direct materials 14 meters at $1.70 per meter$23.80
Direct manufacturing labor 1.6 hours at $8.10 per hour $12.96
Actual Results
Number of T-shirt lots sold 450
Total Direct Inputs:
Direct materials 6,840...
The demand for T-shirts is Q=20 – (P/2), where Q is the number
of t-shirts and P is the price. The private cost of producing
t-shirts is C(Q) = Q^2, with the private marginal cost being MC(P)
= 2Q. Washing and dyeing t-shirts causes water pollution with
marginal external costs of MC(E) = Q.
A) Based on the above information, net welfare: consumer surplus
+ producer surplus - damages of consumption at market equilibrium
is ______(no decimal point)...(numeric answer). Hint:...
Consider the following information for a T-shirt manufacturing
firm that can sell as many T-shirts as it wants for $10 per
shirt.
# of Workers
# of shirts produced per day
MPI
TR
MRPI
0
0
1
40
2
85
3
135
4
195
5
50
6
285
7
315
8
200
9
100
a) Fill in the missing parts of the above table.
b) Verify that MRPl can be calculated in two ways: by change in
TR and MPl...
the
demand function for your brand x shirts is estimated as qd x =
1,000 - 5 px - 10 py + 9 pz+ 0 .001 i the price of x is $ 10, y is
$ 4, z is $ 10 and incomes are $ 20,000. 1) what are your sales?
______________ 2) what is the elasticity of demand for x?
_______________ 3) what is the cross elasticity between x and
z? ______________ 4) are x and...
The demand
function for your brand X shirts is estimated as
Qdx = 1,000 - 5
Px - 10 Py + 9 PZ+ 0 .001 I
The price of X is
$ 10, Y is $ 4, Z is $ 10 and incomes are $ 20,000.
1) What are your
sales?
______________
2) What is the
elasticity of demand for
X?
_______________
3) What is the
cross elasticity between X and Y?
______________
4) Are...
An animal shelter purchases 230 plain T-shirts that it plans to
customize and sell at an upcoming crafts fair. The supplier sends
an invoice for $1,550, including shipping, to be paid within 30
days. The shelter pays one of its volunteers, a graphic artist,
$180 to develop a customized logo for the shirts. A local shop
charges $1.80 per shirt to print the logo. What is the total dollar
amount that should be debited to the inventory account?
Kawhi wanted to buy t-shirts that he could customize and sell for a profit. Steph manufactured plain white t-shirts that seemed to be of high quality. Steph ordinarily sold the t-shirts for $5 each, but he told Kawhi that he would give him a deal if he ordered a large volume. Kawhi said he thought that would work for him, and he looked forward to doing business with Steph.
Three days later Kawhi emailed Steph an order for 1,000...
In a month, I can sell 420 of my unlicensed Warriors T-shirts at
a price of $12. At $18, I sell 180. The T-shirts cost me $8 each,
and I bribe the local law enforcement $300 per month to use a
corner near a BART station to sell my shirts.
1. Assume price-demand is linear
a. Find the slope of the price-demand function.
b. Find the vertical-intercept of the price-demand function.
c. Write a function to predict demand (in a...
The demand curve for T-shirts in the US is given by Q = 100 –
2*P. Suppose that there are no T-shirts produced in the US, but
they can be imported either from Mexico or from the rest of the
world. The price of T-shirts in Mexico is $20, and the price from
the lowest-cost supplier in the rest of the world is $15. The US
charges a tariff of $10 per unit imported.
a) Consider the case where there...