Question

3. Suppose a monopolistically competitive firm’s demand is given by P = 4,000 – 2Q And its cost function is given by TC = 5 + 40Q a. Find the profit maximizing quantity, price, and total profit level. b. If the firm is regulated to charge Price = Marginal Cost, calculate how much profit it will make.

Answer #1

Consider a monopolistically competitive firm selling University
sweatshirts.
The product demand (given in inverse form) is P = 90 – 2Q
The firm’s marginal cost function is MC = 2Q
The profit maximizing quantity produced by this firm is
___________ sweatshirts.
Consider the same sweatshirt firm. The firm will charge a price
of $_____ per sweatshirt at this profit maximizing output
level.
Consider the same sweatshirt firm. Suppose at the profit
maximizing level of output, the firm’s average cost is...

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...

Suppose an industry demand curve is P = 90 − 2Q and each firm’s
total cost function is C = 100 + 2q 2 .
(a) (6 points) If there is only one firm in the industry, find
the market price, quantity, and the firm’s level of profit.
(b) (6 points) Show the equilibrium on a diagram, depicting the
demand curve, and MR and MC curves. On the same diagram, mark the
market price and quantity, and illustrate the firm’s...

The market demand curve is P = 90 − 2Q, and each firm’s total
cost function is
C = 100 + 2q2.
Suppose there is only one firm in the market. Find the
market
price, quantity, and the firm’s profit.
Show the equilibrium on a diagram, depicting the demand function
D (with the vertical and horizontal intercepts), the marginal
revenue function MR, and the marginal cost function MC. On the same
diagram, mark the optimal price P, the quantity Q,...

Suppose there is a perfectly competitive industry in Dubai,
where all the firms are identical. All the firms in the industry
sell their products at 20 AED. The market demand for this product
is given by the equation: (Total marks = 5)
Q = 25 – 0.25P
Furthermore, suppose that a
representative firm’s total cost is given by the equation:
TC = 50 +4Q +
2Q2
What is the inverse demand function for this market?
Calculate the MC function?
Calculate...

Suppose there is a perfectly competitive industry in Dubai,
where all the firms are identical. The market demand for this
product is given by the equation: (Kindly answer clearly)
P = 1000 – 2Q
Also, the market supply equation is
given by the following equation:
P = 100 + Q.
Furthermore, suppose that a
representative firm’s total cost is given by the equation:
TC = 100 + q2 + q
What is the equilibrium quantity and price in this market...

Price Discrimination
Suppose the demand for ticket sales is given by the following
function: P =315−2Q
Further suppose that marginal cost is 3Q and total cost is
3/2Q^2
a) Find the profit maximizing price and quantity. 1
b) What is the maximum profit?
Suppose now that the ticket seller can price discriminate by
checking IDs. There are two
demands in the market:
Adult Demand: PA = 315 − 3Q
Student Demand: PK = 315 − 6Q
Again, suppose that marginal...

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...

Suppose an industry demand curve is P = 90 − 2Q and each firm’s
total cost function is C = 100 + 2q 2 .
a. (2 points) What is the monopolist’s factor markup of price
over marginal cost?
b. (3 points) How does the monopolist’s factor markup of price
over marginal cost compare to that of a perfectly competitive
firm?

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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