6.3 In a competitive market, the market demand curve is Q = 28 - 2p and the market supply curve is 19 If you do not see the Solver tool, you need to load it first. Look up Solver in the Excel help facility for instructions. Qs = -8 + 2p. Use a spreadsheet to answer the following questions.

a. Determine the quantity demanded and quantity supplied for p = $4, 5, 6, …, 14. Determine the equilibrium quantity and price.

b. For prices p = $4, 5, 6, …, 14, determine the consumer surplus. How does an increase in price affect the consumer surplus?

c. For prices p = $4, 5, 6, …, 14, determine the producer surplus. How does an increase in price affect the producer surplus?

d. Suppose the government limits the quantity traded in the market to 6 units. Calculate the resulting deadweight loss.

PLEASE SHOW ANSWERS AND FORMULAS IN EXCEL

Perloff, Jeffrey M.. Managerial Economics and Strategy (p. 265). Pearson Education. Kindle Edition.

Suppose that you estimate the following cost function for your company, which is a monopolistically competitive firm: TC = 80Q -4Q² + 0.25Q³

and the following demand curve for your product: P = 80Q - 2Q

a. Compute and plot the average cost and marginal cost. b. Over what range of output does economies of scale exist? Diseconomies of scale? c. How many units of output will you produce and what price will you charge for each unit? (Hint: A monopolistically competitive firm produces where MR=MC. First find the level of output by setting MR=MC, then substitute the value of Q into the price equation above to find the value of P.) d. Is the company making a profit or loss at the suggested output level? How much?

Suppose that you estimate the following cost function for your company, which is a monopolistically competitive firm:

TC = 80Q - 4Q² + 0.25Q³, and the following demand curve for your product: P = 80Q - 2Q

a. Compute and plot the average cost and marginal cost.

b. Over what range of output does economies of scale exist? Diseconomies of scale?

c. How many units of output will you produce and what price will you charge for each unit? (Hint: A monopolistically competitive firm produces where MR=MC. First find the level of output by setting MR=MC, then substitute the value of Q into the price equation above to find the value of P.)

d. Is the company making a profit or loss at the suggested output level? How much?

A firm has estimated their demand curve and cost function to be. P=4000-2Q TC= 1,000,000 - 1500Q + 3.5Q2

a. Find the equation for Marginal Revenue (MR) as a function of Q.

b. What price would a monopolist charge?

c. Calculate the amount of economic profit she would make.

d. Suppose that the monopolist was able to engage in first-degree price discrimination. What quantity would she be willing to produce?

e. What is the range of prices that she would charge her various buyers? Briefly explain. From _________ to __________.

f. Calculate the economic profit she would make in this case. Compare this to the regular monopoly case and briefly discuss where this additional profit comes from.

ONLY NEED PART E AND F PLEASE. Thank you!

1. Queen Elizabeth has decided to auction off the crown jewels. There are two bidders: the Sultan and the Sheikh. Each will simultaneously submit a bid in a sealed envelope; the highest bidder will win, and pay what he bid. (This is a “First Price Auction”.) The Sultan is only allowed to bid an odd number: 1, 3, 5, 7, or 9. The Sheikh is only allowed to bid an even number: 2, 4, 6, 8, or 10. The Sultan places a value of 8 on the crown jewels, while the Sheikh values them at 7.Now suppose the game is a Second Price Auction instead, so the highest bidder still wins, but he pays the amount of the losing player’s bid. The players’ valuations of the jewels remain the same.

Find all Nash Equilibria of this game.

2) The current stock price (year 0) of the Sizzling Sausage Corporation is $27.50. According to your information and analysis, you expect this company to pay its first dividend of $2.50 in year 2, and from year 3 on, you expect to see a steady growth in dividends. Specifically, you figure out that the dividends in year 3 will be $2.75 and will then continue to grow for another 15 years at 3.5% per year, after which it will grow 2.5% per year forever. The appropriate discount rate is 9%.

If you currently own this stock, ignoring transaction costs what should you do according to the above information - buy more stock at the current market price or sell your stock? (Explain your answer using quantitative analysis)

Suppose a monopolist sells its good to three people. Each person can only purchase one good. The first person is willing to pay $20 for the good, the second person is willing to pay $18, and the third is willing to pay $16. These three people make up the entire market for this monopolist. If the firm can perfectly price discriminate, how much revenue can it earn from selling 3 units?

Which of the following is true of the relationship between price and marginal cost under monopolistic competition?

You are asked to assist the National Zoo in determining entry ticket prices. Assume that there are two different demand curves for a zoo visit. The first demand curve is for visitors aged 12 to 64, while the second demand curve is for children and the elderly. Both the demand and the marginal revenue curve are as follows:

PA = 9.6 - 0.08QA
MRA = 9.6 - 0.16QA
PCS = 4 - 0.05QCS
MRCS = 4 - 0.10QCS
PA is adult price, PCS is child and senior citizen, QA adult visitor demand and QCS = Child and senior visitor demand quantity. Marginal costs are assumed to be zero if the National Zoo decides to discriminate on ticket prices:

1) Calculate the revenue and profitability of each sub-market. 
2) State whether the price discrimination strategy benefits the National Zoo. 

1. A supplier charges $11.99 per unit for bulk lots of proprietary 6 ft. high speed HDMI cables.  Assuming:

1. A profit margin of 8% and a cost markup pricing approach
2. Direct material costs of $6.50 per unit
3. Direct labor costs of $1.50 per unit
4. An industry average of overhead costs of 200% of labor costs.

Do you feel that the price per unit is fair, or do you need to apply pressure for a substantially lower price?   Why?

2. A labor intensive product takes 115 hours to assemble for the first unit.  How long would it take to assemble the 25^thunit assuming a 92% learning rate?  

3. If the learning rate is assumed to be 88%, how long would it take to assemble the 50^thunit?