Question
In: Economics
Monopolistic firm faces the inverse demand function p = 250 – 6Q. Firm’s total cost of...
Monopolistic firm faces the inverse demand function p = 250 – 6Q. Firm’s total cost of production is C = 1250 + 10Q + 8Q2 :
1. Create a spreadsheet for Q = 1 to Q = 20 in increments of 1. Determine the profit-maximizing output and price for the firm and the consequent level of profit.
2. Will the firm continue the production at the profit-maximizing level of output? Show why or why not?
3. Calculate the Lerner Index of monopoly power for each output level and verify its relationship with the value of the price elasticity of demand at the profit-maximizing level of output.
4. Suppose that a specific tax of 10 per unit is imposed on the monopoly. What is the effect on the monopoly’s profit-maximizing price?
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Monopolistic firm faces the inverse demand function p = 250 – 6Q. Firm’s total cost of...
Monopolistic firm faces the inverse demand function p = 250 –
6Q. Firm’s total cost of production is C = 1250 + 10Q +
8Q2 :
1. Create a spreadsheet for Q = 1 to Q
= 20 in increments of 1. Determine the profit-maximizing output and
price for the firm and the consequent level of profit.
2. Will the firm continue the
production at the profit-maximizing level of output? Show why or
why not?
3. Calculate the Lerner Index...
Monopolistic firm faces the inverse demand function p = 250 – 6Q. Firm’s total cost of...
Monopolistic firm faces the inverse demand function p = 250 –
6Q. Firm’s total cost of production is C = 1250 + 10Q +
8Q2 :
1. Create a spreadsheet for Q = 1 to Q
= 20 in increments of 1. Determine the profit-maximizing output and
price for the firm and the consequent level of profit.
2. Will the firm continue the
production at the profit-maximizing level of output? Show why or
why not?
3. Calculate the Lerner Index...
Monopolistic firm has the inverse demand function p = 250 – 6Q. It’s total cost of...
Monopolistic firm has the inverse demand function p = 250 – 6Q.
It’s total cost of production is C = 1250 + 10Q + 8Q2
:
1. Create a spreadsheet for Q = 1 to Q
= 20 in increments of 1. Determine the profit-maximizing output and
price for the firm and the consequent level of profit.
2. Will the firm continue the
production at the profit-maximizing level of output? Show why or
why not?
3. Calculate the Lerner Index...
Monopolistic firm has the inverse demand function p = 250 – 5Q. Firm’s total cost of...
Monopolistic firm has the inverse demand function p = 250 – 5Q.
Firm’s total cost of production is C = 1250 + 10Q + 8Q2
:
1. Create a spreadsheet for Q = 1 to Q
= 20 in increments of 1. Determine the profit-maximizing output and
price for the firm and the consequent level of profit.
2. Will you continue the production at
the profit-maximizing level of output? Show why or why not?
3. Calculate the Lerner Index of...
The inverse demand function a monopoly faces is P = 100 − Q. The firm’s cost...
The inverse demand function a monopoly faces is P = 100 − Q. The
firm’s cost curve isTC(Q) = 10 + 5Q.Suppose instead that the
industry is perfectly competitive. The industry demand curve and
firm cost function is same as given before.
(j) (4 points) What is the level of output produced? Compare it
to the output of single price monopoly.
(k) (4 points) What is the equilibrium price for this industry?
Compare it to the price charged of single...
Suppose that the incumbent firm faces an inverse demand function P = 110 − Q, and...
Suppose that the incumbent firm faces an inverse demand function
P = 110 − Q, and has a constant marginal cost equal to 10. The
potential entrant has a constant marginal cost equal to 10 and a
fixed cost of 100. The incumbent firm first determines its quantity
and commit to this amount. The potential entrant then determines
whether it would enter and the quantity.
Given that the entrant enters and the incumbent's quantity q1,
the entrant's optimal strategy?
What...
Suppose we have a monopolist that faces an inverse demand function and total cost function of...
Suppose we have a monopolist that faces an inverse demand
function and total cost function of
Pd= 200−2Qd
C(Qs)=Qs^2 + 8Qs + 50
Note that the last part of this question asks you to graph much
of your answers to the first parts of this question.
(a) Find the profit maximizing level of output (Q) and the
corresponding price charged (P).
(b) Find the Socially optimal level of output and price. (hint:
this is the case when we assume perfect...
the inverse demand function for good X is P = 5−0.05Q. The firm’s cost curve is...
the inverse demand function for good X is P = 5−0.05Q. The
firm’s cost curve is TC(Q) = 10+Q
If the monopoly could engage in perfect price
discrimination,
(1.26) (2 points) What are the total variable costs at the
profit maximizing level of output? (1.27) (2 points) What is the
value of consumer surplus at the profit maximizing level of output?
(1.28) (2 points) What is the value of producer surplus at the
profit maximizing level of output?
. Suppose a monopoly faces inverse market demand P = 600 – 0.01Q, and that the firm’s...
. Suppose a monopoly faces inverse market demand P =
600 – 0.01Q, and that the firm’s total cost curve is C = 2,500,000
+ 10Q + 0.015Q2.
Find the firm’s profit-maximizing price and output
PM, QMand sketch the
equilibrium.
Find the firm’s ATC formula. What is the ATC at the
output level you found in part a?
Add the ATC to your graph and indicate the firm’s
profit. What is the total profit?
What is the per unit profit at
QM? Explain why...
Afirm faces an (inverse) demand function p(y)=10 –y, where p is price,yis quantity.The cost function of...
Afirm faces an (inverse) demand function p(y)=10 –y, where p is
price,yis quantity.The cost function of the firm is given by c(y) =
y^2+1. Dont copy other guys solution!!!
(1) Draw thecurves of(inverse) demand function and marginal
revenue. Show your detailed work such as slope, intercept.
(2) What is the optimal choice of output and corresponding
profitof the firm?Show each of your steps clearly.(Results might
not be integers. Do NOTround your answer)
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