Question

- 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 +
2Q ^{2}**

- What is the inverse demand function for this market?

- Calculate the MC function?

- Calculate the MR function?

- Calculate the profit maximizing level of output for the firm?

- Calculate the size of the profit? Show it graphically

- Is this industry SR or LR?

- Suppose the demand function for a monopolist’s product is given by:

**Q = 80 –
5P
**
**(Total marks = 5)**

and the cost function is given by

**C = 30 + 2Q + 0.5Q ^{2}**

- What is the inverse demand function for this monopoly?

- Calculate the MC.

- Calculate the MR.

- Determine the profit-maximizing price.

- Determine the profit-maximizing quantity.

- How much profit will the monopolist make?

- What is the value of the consumer surplus under monopoly?

- What is the value of the deadweight loss?

- Suppose the inverse demand for a monopolist’s product is given by

**P (Q) = 20 –
3Q
(Total marks = 5)**

The monopolist can produce output in two plants. The marginal cost of producing in plant 1 is

**MC _{1} = 20 +
2Q_{1}**

While the marginal cost of producing in plant 2 is

**MC _{2} = 10 +
5Q_{2}**

- How much output should be produced in each plant?

- What price should be charged?

Answer #1

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 100 AED. The market demand for this product
is given by the equation: (Kindly solve
clearly)
Q = 1000 – 4P
Furthermore, suppose that a
representative firm’s total cost is given by the equation:
TC = 1250 +
2Q2
What is the inverse demand function for this market?
Calculate the MC function?
Calculate the MR...

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...

2. Suppose the demand function for a monopolist’s product is
given by: Q = 80 – 5P (Total marks = 5) and the cost function is
given by C = 30 + 2Q + 0.5Q2 A) What is the inverse demand function
for this monopoly? B) Calculate the MC. C) Calculate the MR. D)
Determine the profit-maximizing price. E) Determine the
profit-maximizing quantity. F) How much profit will the monopolist
make? G) What is the value of the consumer surplus...

Suppose a firm sells its product in a perfectly competitive
industry in Dubai, where all the firms charge a price of 90
dirhams. The firm’s total costs are given by the following
equation: TC = 50 + 10Q + 2Q2 (Kindly answer clearly)
a) Calculate the MC function?
b) Calculate the MR function?
c) Calculate the profit maximizing level of output for the
firm?
d) Calculate the size of the profit? Show it graphically
e) Is this industry SR or...

Suppose the inverse demand for a monopolist’s product is given
by
P (Q) = 20 –
3Q
(Total marks = 5)
The monopolist can produce output in
two plants. The marginal cost of producing in plant 1 is
MC1 = 20 +
2Q1
While the marginal cost of producing
in plant 2 is
MC2 = 10 +
5Q2
How much output should be produced in each plant?
What price should be charged?

Monopolies and perfectly competitive firms maximize profits by
producing the output where MR = MC. Since both use the same rule
why is it that in perfect competition, P=MC, at this profit
maximizing output but in monopoly P>MC?

Suppose the inverse demand for a monopolist’s product is given
by
P (Q) = 20 – 3Q
The monopolist can produce output in
two plants. The marginal cost of producing in plant 1 is
MC1 = 20 +
2Q1
While the marginal cost of producing
in plant 2 is
MC2 = 10 +
5Q2
How much output should be produced in each plant?
What price should be charged?

A monopolist facing a market demand Q = 240 – 2p has the total
cost function TC(q) = q2. Draw carefully the relevant
graph with MC, MR, D curves and identify all relevant points,
intersections, intercepts.
(a) What is the monopolist’s profit maximizing quantity and
price?
(b) If the market is reorganized as perfectly competitive, what
should be the market price and quantity?
(c) Calculate the DWL associated with the monopoly in (a).
Now the government notices that the monopolist...

4) In the perfectly competitive gadget industry there are 10
firms with identical costs given by C = 500 + 20q + q2, none of
which believes it can alter price. Marginal cost is given by the
function MC=20 + 2q.
a. Find the shutdown point of one of these firms. Be sure to
explain what you are doing. (5 points)
b. If price equals $400 what is the profit maximizing level of
output for an individual firm? (5 points)...

Suppose in Pakistan, all the firms are identical with identical
cost curves which mean
industry is perfectly competitive. Now please consider this
following information about the
industry: A representative firm’s total cost is given by the
equation TC = 100 + q2 + q where
q is the quantity of output produced by the firm. You also know
that the market demand for
this product is given by the equation P = 1000 – 2Q where Q is the
market...

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