Question

Suppose a price-taking firm faces a market price of P = $70 and has a total cost function given by: TC = 269 + 2Q + Q2.(Q squared) a. Algebraically derive the firm’s fixed cost, average cost and marginal cost functions. b. What quantity will the firm produce? c. Compute the revenues, costs, and profits associated with the profit-maximizing quantity.

Answer #1

Suppose a perfectly competitive firm has marginal and total
costs given by M C = 3 + 2q and T C = 2 + 3q + q2, respectively,
where q is the quantity of output produced by the firm. In a
monetary union the firm faces a constant price p1 = 9 for its
product. Outside of the monetary union with a flexible exchange
rate it faces a 50-50 chance of p2 = 11 or p3 = 7. The firm...

A perfectly competitive firm in the short run has Total Cost and
Marginal Cost functions given by TC(Q)=9+Q+Q2 and
MC(Q)=1+2Q, respectively. The firm faces a price of P=$17.
Determine the output that the firm will produce and the profit.
Show the solution graphically.

1. Suppose a monopolist faces the demand for its good or service
equal to Q = 130 - P. The firm's total cost TC = Q2 +
10Q + 100 and its marginal cost MC = 2Q + 10. The firm's profit
maximizing output is
2. Suppose a monopolist faces the demand for its good or service
equal to Q = 130 - P. The firm's total cost TC = Q2 +
10Q + 100 and its marginal cost MC...

Suppose a monopoly firm has the following Cost and Demand
functions:
TC=Q2
P=20-Q
MC=2Q
MR=20-2Q
Carefully explain what the firm is doing and why.
Find the firm’s Profit maximizing Q
Find the firm’s Profit maximizing P.
Find the firm’s Profit.
2. Suppose because of an advertising campaign, which costs $150,
the monopoly’s demand curve is: P=32-Q so its MR= 32-2Q
Looking closely at the TC function and the demand curve,
explain the effects of the advertising campaign on the equations...

Example 1:
Suppose a monopolist faces an inverse demand function as p = 94
– 2q. The firm’s total cost function is 1.5q2 + 45q +
100. The firm’s marginal revenue and cost functions are MR(q) = 90
– 4q and MC(q) = 3q + 45.
How many widgets must the firm sell so as to maximize its
profits?
At what price should the firm sell so as to maximize its
profits?
What will be the firm’s total profits?

Firm A is operating in a perfectly competitive market
The market price for its product is $45
Its total cost function is: TC(Q)=2900+19Q+0.01Q2
Its marginal cost function is MC(Q)=19+0.02Q
Calculate PROFITS at the profit maximizing quantity and
price

1. Consider a monopolist where the market demand curve
for the produce is given by P = 520 - 2Q. This monopolist has
marginal costs that can be expressed as MC = 100 + 2Q and total
costs that can be expressed as TC = 100Q + Q2 + 50. (Does not need
to be done. Only here for reference)
2. Suppose this monopolist from Problem #1 is regulated
(i.e. forced to behave like a perfect competition firm) and the...

Consider a pure monopolist who faces demand Q= 205 - 2P and has
a cost function C(Q) = 2Q.
Solve for the information below, assuming that the monopolist is
maximizing profits.
The monopolist is able to produce at a constant marginal cost of
_________
The monopolist's profit-maximizing level of output is Q* =
______
The monopolist's profit-maximizing price is P* = _________

Question 8:
Suppose a monopolist faces a market demand of QD=800−PQD=800−P
and has a total cost function of TC(Q)=Q2TC(Q)=Q2.
What is the equilibrium price and quantity decided by the
monopolist?
What is the average cost at the equilibrium quantity?
How much profit does the monopolist make at the equilibrium
price and quantity?

Consider a firm with the demand function P(Q)=(50-2Q), and the
total cost function TC(Q)=10,000+10Q. Find the profit maximizing
quantity. Calculate the profit maximizing price (or the market
price). Hint: MR(Q)=(50-4Q),

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