Homework Answers
Ans) Q = 2.5
Marginal cost (MC) = dC(Q)/dQ = 5 + 2Q
P = 10
At Profit maximization, P = MC
10 = 5 + 2Q implies Q = 2.5
Suppose a firm’s inverse demand curve is given by P=120-.5Q and its cost equation is C=420+60Q+Q2....
Suppose a firm’s inverse demand curve is given by P=120-.5Q and its cost equation is C=420+60Q+Q2. Find the firm’s optimal quantity, price and profit (1) by using the profit and marginal profit equation and (2) by setting MR equal to MC. Also provide a graph of MR and MC. Suppose instead that the firm can sell any and all of its output at the fixed market price P=120. Find the firm’s optimal output.
costs? II IOL I0 4. Suppose DD Inc is a monopolist with C-100-5Q+Q2 and demand is...
costs? II IOL I0 4. Suppose DD Inc is a monopolist with C-100-5Q+Q2 and demand is P-55-20. (a) What price should DD set to maximize profits? What is the profit maximizing level of output? How much profit and consumer surplus does DD generate? (b) What would output be if DD acted like a perfect competitor and set MC-P. What profit and consumer surplus would be generated? (c) What is the deadweight loss from monopoly power associated with part (a)? (d)...
Suppose price-taking firms have cost functions given by C(q) = 90 + 5q + 0.025q^2 What...
Suppose price-taking firms have cost functions given by C(q) = 90 + 5q + 0.025q^2 What are the equations of marginal costs and average costs? How much would the firm produce at prices of $9, $10, $11, and $12? How much profit would the firm earn at prices of $9, $10, $11, and $12? Graph the MC, AC. Indicate the profits at a price of $9 per unit. What price would be charged in the perfect competitive equilibrium?
Consider firms facing the demand curve P=90-5Q 17 where Q- Q1 +Q2 The firms' cost functions...
Consider firms facing the demand curve P=90-5Q 17 where Q- Q1 +Q2 The firms' cost functions are Cl (Q1) = 15 + 5Q1 12 and (2)-+1002 Suppose that both firms have entered the industry. What is the joint profit-maximizing level of output? How much will each firm produce? Combined, the firms will produce units of output, of which Firm 1 will produceunits and Firm 2 will produce units. (Enter a numeric response using a real number rounded to two decimal...
PLEASE HELP ON GRAPH AND LAST QUESTION ONLY Consider two firms facing the demand curve P-90-5Q,...
PLEASE HELP ON GRAPH AND LAST QUESTION ONLY
Consider two firms facing the demand curve P-90-5Q, 17 where Q Q1+Q2. The firms' cost functions are C(Q1) 10+501 and C2 (Q2)" 5 + 10Q2 Suppose that both firms have entered the industry. What is the joint profit-maximizing level of output? How much will each firm produce? Combined, the firms will produce 8.5 units of output, of which Firm 1 will produce 8.5 units and Firm 2 will produce 8 9 10...
2. Suppose that a perfectly competitive firm’s total cost of producing output q is T C(q)...
2. Suppose that a perfectly competitive firm’s total cost of producing output q is T C(q) = 5 + 5q 6q2 + 4q3. (a) Find the short-run supply curve of a firm in this industry. Be sure to identify the point at which the firm shuts down. (b) How much will the firm produce at p⇤ = 5?
Suppose there are two firms, 1 and 2, competing in quantity. The market demand is p...
Suppose there are two firms, 1 and 2, competing in quantity. The market demand is p = 15-(q1 +q2), where q1 and q2 are the quantities produced by rms 1 and 2. Both rms have constant marginal cost c1 = c2 = 3. (a) [10] Find the Cournot equilibrium of this market. Compute the consumer surplus in equilibrium. b) Now suppose firms 1 and 2 merge, so that they become a monopolist with demand function p = 15 ? q,...
. Suppose TC 10+0.12, MC0.2q. If p 10, the firm's profit on the perfectly competitive market...
. Suppose TC 10+0.12, MC0.2q. If p 10, the firm's profit on the perfectly competitive market in the short run will be (a) 240 (b) 250 (c) 260 (d) -10 because the firm will shut down. (e) None of the above 4. Dayna's Doorstops, Inc. (DD) is a monopolist in the doorstop industry. Its cost is TC = 100-5q+q2, MC = 2q-5, and the demand function is Q = 55-p (inverse demand is p 55 Q). What price should DD...
a. Solve for the optimal output to produce at each plant (Q1*, Q2*). b. Given this...
a. Solve for the optimal output to produce at each plant (Q1*,
Q2*).
b. Given this output, what is the firm’s price and maximum
profit?
c. Suppose the monopolist is now facing a capacity constraints
at plant 2. Due to a labor dispute, there are only enough labor
hours to produce 70 units at plant 2. How will this constraint
impact the firm’s decision of Q1*, Q2*, price and profit?
4. 10 pts. A monopolist's inverse demand function is P...
Joint profit maximizing output and Cournot model Consider two firms facing the demand curve P=75-5C, where...
Joint profit maximizing output and Cournot model
Consider two firms facing the demand curve P=75-5C, where Q Q1 +Q2. The firms' cost functions are Cl (Q1) = 15 +10Q1 and C2 (Q2)-10 + 20Q2. Suppose that both firms have entered the industry. What is the joint profit-maximizing level of output? How much will each firm produce? Combined, the firms will produce units of output, of which Firm 1 will produce units and Firm 2 will produceunits. (Enter a numeric response...
costs? II IOL I0 4. Suppose DD Inc is a monopolist with C-100-5Q+Q2 and demand is P-55-20. (a) What price should DD set to maximize profits? What is the profit maximizing level of output? How much profit and consumer surplus does DD generate? (b) What would output be if DD acted like a perfect competitor and set MC-P. What profit and consumer surplus would be generated? (c) What is the deadweight loss from monopoly power associated with part (a)? (d)...
Consider firms facing the demand curve P=90-5Q 17 where Q- Q1 +Q2 The firms' cost functions are Cl (Q1) = 15 + 5Q1 12 and (2)-+1002 Suppose that both firms have entered the industry. What is the joint profit-maximizing level of output? How much will each firm produce? Combined, the firms will produce units of output, of which Firm 1 will produceunits and Firm 2 will produce units. (Enter a numeric response using a real number rounded to two decimal...
PLEASE HELP ON GRAPH AND LAST QUESTION ONLY
Consider two firms facing the demand curve P-90-5Q, 17 where Q Q1+Q2. The firms' cost functions are C(Q1) 10+501 and C2 (Q2)" 5 + 10Q2 Suppose that both firms have entered the industry. What is the joint profit-maximizing level of output? How much will each firm produce? Combined, the firms will produce 8.5 units of output, of which Firm 1 will produce 8.5 units and Firm 2 will produce 8 9 10...
. Suppose TC 10+0.12, MC0.2q. If p 10, the firm's profit on the perfectly competitive market in the short run will be (a) 240 (b) 250 (c) 260 (d) -10 because the firm will shut down. (e) None of the above 4. Dayna's Doorstops, Inc. (DD) is a monopolist in the doorstop industry. Its cost is TC = 100-5q+q2, MC = 2q-5, and the demand function is Q = 55-p (inverse demand is p 55 Q). What price should DD...
a. Solve for the optimal output to produce at each plant (Q1*,
Q2*).
b. Given this output, what is the firm’s price and maximum
profit?
c. Suppose the monopolist is now facing a capacity constraints
at plant 2. Due to a labor dispute, there are only enough labor
hours to produce 70 units at plant 2. How will this constraint
impact the firm’s decision of Q1*, Q2*, price and profit?
4. 10 pts. A monopolist's inverse demand function is P...
Joint profit maximizing output and Cournot model
Consider two firms facing the demand curve P=75-5C, where Q Q1 +Q2. The firms' cost functions are Cl (Q1) = 15 +10Q1 and C2 (Q2)-10 + 20Q2. Suppose that both firms have entered the industry. What is the joint profit-maximizing level of output? How much will each firm produce? Combined, the firms will produce units of output, of which Firm 1 will produce units and Firm 2 will produceunits. (Enter a numeric response...
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