Question

*Drybar*, a hair salon, faces a weekly demand for
blowouts equal to qD = 1,040 – 20P. The salon has weekly total cost
of TC(q)=0.05q^2+20q+500.

In a diagram, draw *drybar*’s demand curve (PD) and
marginal revenue curve (MR).

In the same diagram, illustrate *drybar*’s average total
cost curve (ATC), and marginal cost curve (MC).

Find *drybar*’s minimum efficient scale and label it
qMES.

Find the profit maximizing level of output (q*) and price (p*).

Compute consumer and producer surplus when the salon produces the profit maximizing level of output.

Suppose you are a research analyst. You have no information on
*drybar*’s cost structure, however you can estimate the
salon’s demand function and you can observe its price and
quantity.

6. Use this information (and not the TC function given above) to estimate the restaurant’s current marginal cost and the current price mark-up.

Answer #1

A monopolist faces the following demand curve, marginal
revenue curve, total cost curve and marginal cost curve for its
product: Q = 200 - 2P
MR = 100 - Q
TC = 5Q MC = 5
a. What is the profit maximizing level of output?
b. What is the profit maximizing price? c. How much profit
does the monopolist earn?

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...

1) The inverse demand curve a monopoly faces
is
p=110−2Q.
The firm's cost curve is
C(Q)=30+6Q.
What is the profit-maximizing solution?
2) The inverse demand curve a monopoly faces
is
p=10Q-1/2
The firm's cost curve is
C(Q)=5Q.
What is the profit-maximizing solution?
3) Suppose that the inverse demand function for
a monopolist's product is
p = 7 - Q/20
Its cost function is
C = 8 + 14Q - 4Q2 + 2Q3/3
Marginal revenue equals marginal cost when output
equals...

A business faces the following average revenue (demand) curve: P
= 10 − 0.05Q where Q is weekly production and P is price, measured
in dollars per unit. Its marginal revenue curve is MR = 10 − 0.1Q.
Its cost function is given by C = 6Q. Assume that the business
maximizes profits. What is the level of production, price, and
total profit per week?

a) Assume the firm operates in the monopoly market in the long
run with the demand function P = 100-Q and TC = 640 + 20Q with TC
showing the total cost of production, Q and P respectively of
output quantity and price. Using the information above,
publish
i) Total revenue function (TR)
ii) Marginal revenue (MR)
iii) Marginal cost function (MC)
iv) Determine the level of price and quantity of production that
maximizes profit
v) Determine the amount of...

A monopolistically competitive firm faces the inverse demand
curve P = 100 – Q,and its marginal cost is constant at $20. The
firm is in long-run equilibrium.
a.Graph the firm's demand curve, marginal revenue curve, and
marginal cost curve. Also, identify the profit-maximizing price and
quantity on your graph.
b.What is the value of the firm's fixed costs?
c.What is the equation for the firm's ATC curve?
d.Add the ATC curve to your graph in part a
please actually graph...

Suppose that a dominant firm faces fringe competition with
capacity K=12 units, and market demand Q=2096-4P.
Suppose further that the dominant firm and fringe competition
are able to produce with total costs given by C(Q)=20Q.
Assume that the dominant firm and fringe competition are profit
maximizers.
a. The marginal cost of a unit of output for the dominant firm
is __________
b. The output of the fringe competition is ___________
units.
c. The profit-maximizing level of output for the dominant...

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* = _________

A monopoly faces the following inverse demand function:
p(q)=100-2q, the marginal cost is $10 per unit.
What is the profit maximizing level of output, q*
What is the profit maximizing price
what is the socially optimal price
What is the socially optimal level of output?
What is the deadweight loss due to monopoly's profit maximizing
price?

An oligopoly firm faces a kinked demand curve. One segment is
given by the equation P = 100 – Q, and the other segment is given
by P = 120 – 2Q. The firm has a constant marginal cost of $45.
a) What is the firm’s profit-maximizing level of output and
price?
b) What are the upper and lower limits which marginal cost may
vary without affecting either the profit-maximizing output or
price?

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