Question
In: Economics
Assume a firm faces the following demand and cost functions: Demand is: Q = 2600 –...
Assume a firm faces the following demand and cost functions: Demand is: Q = 2600 – 100P + 0.2M – 500Pr ; AVC = 20 – 0.07Q + 0.0001Q^2; M = $20,000; Pr = $2; Should the firm shut down in the short-run? What are the expected profits if fixed costs are $22,500?
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Assume a profit maximizing monopolist faces the following demand, marginal revenue and cost functions:
Assume a profit maximizing monopolist faces the following
demand, marginal revenue and cost functions: Demand: P = 400 - 50Q
Total Cost: TC = 100Q Marginal cost MC = 100 Marginal Revenue MR =
400 – 100Qa) Find the profit maximizing output level for the
monopolist.b) At this level of output what price will the monopolist
charge?c) What is the total profit for the monopolist?d) If the monopolist were a revenue maximizer instead of a
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A firm with market power faces the following estimated demand and average variable cost functions: Qd...
A firm with market power faces the following estimated demand
and average variable cost functions:
Qd = 39,000 - 500P + 0.4M - 8,000PR
AVC = 30 - 0.005Q + 0.0000005Q2
where Qd is quantity demanded, P is price, M is income, and PR is
the price of a related good. The firm expects income to be $40,000
and PR to be $2. Total fixed cost is $100,000. What price should
the firm charge in order to maximize profit?
$42.50...
Suppose a business firm faces the following demand equation: Q = 40 – 0.5P. Marginal cost...
Suppose a business firm faces the following demand equation: Q =
40 – 0.5P. Marginal cost is MC = $20.
a. Suppose the firm applies the two-part pricing strategy.
Compute the fixed fee, variable (per unit) fee, output, revenue and
cost associated with this pricing.
b. What type of businesses should consider implementing the
two-part pricing strategy? Please explain.
Suppose a business firm faces the following demand equation: Q = 40 – 0.5P. Marginal cost...
Suppose a business firm faces the following demand equation: Q =
40 – 0.5P. Marginal cost is MC = $20. Now suppose the firm decides
to offer quantity discount by selling the product in bundles of 10
units.
a. What is the maximum price that the firm can charge for the
first 10 units, for the second 10 units, and for the third 10
units? Now compute the revenue and cost of selling the three
bundles (a total 30 units)...
Suppose a business firm faces the following demand equation: Q = 40 – 0.5P. Marginal cost...
Suppose a business firm faces the following demand equation: Q =
40 – 0.5P. Marginal cost is MC = $20.
b. What type of businesses should consider implementing the
two-part pricing strategy? Briefly explain your answer
a. Suppose the firm applies the two-part pricing strategy.
Compute the fixed fee, variable (per unit) fee, output, revenue and
cost associated with this pricing
Suppose a firm in a perfectly compectitive market faces following cost functions: AVC = 8000/Q+70 +.25...
Suppose a firm in a perfectly compectitive market faces
following cost functions:
AVC = 8000/Q+70 +.25 Q
TC = 8000+70 Q +.25 Q2
The firm faces a market price if Rs 295 with this information
calculate the following.
a. Firm's profit maximizing output level?
b. Will firm operate in short run or will shut down
temporarily?
c. In real-world situations,monopoiles do face losses or below
normal profits. Identify one such real world example of
companies/firms and state the reason for...
Consider a market that faces the following market supply and demand functions Q S = 2 + p
Consider a market that faces the following market supply and demand functions
Q S = 2 + p
Q D = 10- 1/2 p
where identical firms face the total cost function of T C = 4 + q + q2
a) What is the market price?
b) Derive the average variable cost, average total cost, and marginal cost functions.
c) In the short run, how much does each firm produce?
d) In the short run, how much economic profit...
Assume the market for beef is described by the following demand and supply functions: Q(p) =...
Assume the market for beef is described by the following demand
and supply functions:
Q(p) = -6 + 6P…………………………………(1)
Q(p) = 50 – 2P^2…………………………………(2)
(a)Which of the two equations is the demand curve? How did you
know?
(b)Find the equilibrium price ($) and equilibrium quantity
transacted (000 lb.)in this market.
(c)Determine the price elasticity of demand at equilibrium for
this product.
(d)Suppose the adoption of a new technology allows this beef
producer to increase supply by 4, how will this...
Assume the market for beef is described by the following demand and supply functions: Q(p) =...
Assume the market for beef is described by the following
demand and supply functions:
Q(p) = -6 + 6p …………………………………
Q(p) = 50 – 2P^2 …………………………………
(a)Which of the two equations is the demand curve? How did you
know?
(b)Find the equilibrium price ($) and equilibrium quantity
transacted (000 lb.)in this market.
(c)Determine the price elasticity of demand at equilibrium for
this product.
(d)Suppose the adoption of a new technology allows this beef
producer to increase supply by 4, how...
Assume the market for beef is described by the following demand and supply functions: Q(p) =...
Assume the market for beef is
described by the following demand and supply
functions:
Q(p) = -6 +
6P…………………………………(1)
2
Q(p) = 50 –
2P…………………………………(2)
(a)Which of the two equations
is the demand curve? How did you know?
(b)Find the equilibrium price
($) and equilibrium quantity transacted (000 lb.)in this
market.
(c)Determine the price
elasticity of demand at equilibrium for this product.
(d)Suppose the adoption of a new
technology allows this beef producer to increase
supply by 4, how will...
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