Question

Kalamazoo Competition-Free Concrete (KCC) is a local monopolist of ready-mix concrete.

Its annual inverse demand function is **P= 100
- 0.5Q**

where *P* is the price, in dollars, of a cubic yard of
concrete and *Q* is the number of cubic yards sold per
year.

Suppose that Kalamazoo's marginal cost is: **MC = 75 +
0.25Q**

a. What is its profit-maximizing sales quantity and price? Round to
the nearest whole number.

*Q* = units.

*P* = $.

b. What is the value of the MC at is profit-maximizing sales
quantity? Round to the nearest whole number.

$.

c. What is the elasticity of demand for this product? .

(Include a negative sign if necessary, and round your answer to include only 1 significant digit, e.g. -0.5)

Answer #1

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given by p = 12 – 0.5q,
where p is the price of the product
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marginal and average cost is equal to 6.
(a) Find the profit maximising level of q and
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of output and profit if the maximum price that can be charged per
unit is (i) p = 7, (ii) p =...

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