Question

2. You have been hired to do some consulting for Fishy Joe’s, a profit-maximizing monopolistic competitor selling “popplers”. You have estimated the firm’s demand, marginal revenue, and marginal cost curves to be, respectively, P = 100 − 2Q, MR = 100 − 4Q, and MC = 20 + Q, where quantity Q is measured in servings and prices are measured in dollars per serving. Currently, the firm is producing where

• Price = $50/serving

• Average Total Cost = $38/serving

(a) Is the firm currently maximizing profits? If not, what should it do to maximize profits?

(b) Based on your answer to the above question, all else equal, in the long-run will the firm i. produce more output, less output, or the same level of output? ii. earn higher or lower profits?

Answer #1

Given the following information for a monopolistic
competitor:
Demand: P = 68 – 7(Q)
Marginal revenue: MR = 68 – 14(Q)
Marginal cost: MC = 2(Q) + 8
Average total cost at equilibrium is 22
1. At what output (Q) will this firm maximize
profit?
2. At what price (P) will this firm maximize
profit?
3. What is the total revenue (TR) earned at this output
level?
4. What is the total cost (TC) accrued at this
output?
5. What...

Brucely Brothers' short-run cost curve is: C = (2q^2/K)+10K,
where q is the number of outputs produced and K is the number of
robot hours they hire. Currently, they hire 40 robot hours per
period. The short-run marginal cost curve is: MC = 4q/K (i) If
Brucely Brothers receive $8 for every unit of output they produce,
what is their profit maximizing output level? (ii) Calculate their
profits. Should they shut down in the short-run? Explain why.

Question 11
Monopolistic competition features a _____ number of competing
firms selling products that are _____.
Group of answer choices
large; identical
small; identical
large; differentiated
small; differentiated
Question 12
In market structures known as _____, a small number of firms
dominate.
Group of answer choices
perfect competitions
legal monopolies
natural monopolies
oligopolies
Question 13
Comparing perceived demand curves, a perfect competitor has a
_____ a monopolistic competitor.
Group of answer choices
flatter curve than
lower price elasticity of demand...

2. Suppose you are the manager of a watchmaking firm operating
in a competitive market. Your cost of production is given by C =
200 + 2q2, where q is the level of output and C is total cost. (The
marginal cost of production is 4q; the fixed cost is $200.)
a. If the price of watches is $100, how many watches should you
produce to maximize profit?
b. What will the profit level be?
c. At what minimum price...

A monopolist faces a demand curve P= 24 – 2Q, where P is
measured in dollars per unit and Q in thousands of units and MR=24
– 4Q. The monopolist has a constant average cost of $4 per unit and
Marginal cost of $4 per unit. a. Draw the average and marginal
revenue curves and the average and marginal cost curves on a graph.
b. What are the monopolist’s profits-maximizing price and quantity?
c. What is the resulting profit? Calculate...

Assume that consumers view tax preparation services as
undifferentiated among producers, and that there are hundreds of
companies offering tax preparation in a given market. The current
market equilibrium price is $120. Jojo’s Tax Service has a daily,
short-run total cost given by TC = 100 + 4Q2. Answer the
following questions:
How many tax returns should Jojo prepare each day if her goal is
to maximize profits?
How much will she earn in profit each day?
A perfectly competitive...

Assume that consumers view tax preparation services as
undifferentiated among producers, and that there are hundreds of
companies offering tax preparation in a given market. The current
market equilibrium price is $120. Jojo’s Tax Service has a daily,
short-run total cost given by TC = 100 + 4Q2. Answer the
following questions:
How many tax returns should Jojo prepare each day if her goal is
to maximize profits?
How much will she earn in profit each day?
A perfectly competitive...

Use the following
information to answer questions 2-4.
Assume there are only two producers of tennis rackets: Wilson and
Prince. The market demand for tennis rackets is depicted by the
algebraic formula P = 100 - Q, where P stands for price and Q
stands for quantity of rackets. If the market were monopolized, the
resulting formula for the monopolist's marginal revenue would be MR
= 100 - 2Q, where MR stands for marginal revenue. Assume that both
producers face...

You manage pricing at a small industrial parts manufacturer that
competes with over one hundred other similar manufacturing
companies. Each company’s products, including your 213B product,
are somewhat differentiated because of the variation in quality and
service provided by each company, and no single competitor
dominates the market. Given your competitors’ current prices for
similar products, the demand for your product number 213B is given
by P=50-.02Q, where P is the price you charge per unit of this
product and...

Jane operates a muffin shop in a market where she takes the
price of $2 per muffin as given. Her total cost of production is
given by TC(q) = 15 + 0.01q2 and her marginal cost of
production is given by MC(q) = 0.02q. At her profit maximizing
output level of q* = ______, Jane earns ______ profit.
Question 7 options:
a)
50 muffins; $5
b)
100 muffins; $85
c)
100 muffins; $100
d)
2,000 muffins; $1,580
e)
0 muffins;...

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