Lerner's index : (P-MC)/P = 1/e
(12-MC)/12= 1/3
(12-MC)/4= 1
12-MC = 4
MC = 8
Marginal cost is 8
57. A profit-maximizing monopolist faces a downward-sloping demand curve that has a constant elasticity of -3....
If a profit-maximizing monopolist faces a downward-sloping market demand curve, what do we know?What can the marginal product of labour be defined as?
A monopolist firm faces a demand with constant elasticity of - 2.8. It has a constant marginal cost of $25 per unit and sets a price to maximize profit. If marginal cost should increase by 15 percent, would the price charged also rise by 15 percent? O A. No. Since the demand curve is downward sloping, a 15 percent increase in MC will cause the price to increase by less than 15 percent. OB. Yes. Since the price elasticity of...
1) The Fox Company has market power (faces a downward-sloping demand curve). The industry's total cost is C= 30Q +1.5Q^2 and its inverse demand is P = 300 - 3Q. *What is the firm's profit-maximizing output and price? *If the firm's inverse demand changes to P = 240 - 2Q and its total costs remains unchanged, what is the firm's profit-maximizing level of output and price? State how this compares to the answer for the first bullet point. *Sketch a...
A monopolist firm faces a demand with constant elasticity of negative 1.8. It has a constant marginal cost of $15 per unit and sets a price to maximize profit. If marginal cost should increase by 20 percent, would the price charged also rise by 20 percent? A. Yes. Since the price elasticity of demand is constant, Upper P equals 1.8 MC. Thus, if MC increases by 20 percent, price also increases by 20 percent. B. Yes. Since the price elasticity...
3. Suppose that Bob's widgets faces a downward sloping demand curve given by Q 100-4P. If Bob's marginal cost of production is $2 per unit, what is his profit maximizing level of output? His profit maximizing price?
10. Firm X is a monopolist that faces market demand with elasticity equal to -2, and Firm X's marginal cost of output is $24/unit. Use the mark-up formula to find Firm X's profit maximizing price. 11. Firm W is a monopolist that faces market demand with elasticity equal to -3, and Firm W's profit maximizing price is $36/unit. Use the mark-up formula to infer Firm W's marginal cost per unit at its current output level.
Consider a monopolist facing a straight line downward sloping demand curve. Suppose that the monopolist has constant marginal cost c>0 and wishes to maximise profit. At the optimal price and quantity choice, if the monopolist were to reduce its price marginally, the total revenue Select one: O a decreases. b. increases. O c. does not change. O d. Not enough information to determine.
i) A profit-maximising firm faces a downward-sloping demand curve for its output and has marginal costs that increase with output. Show, on a single diagram, how its profit maximisation decision can be represented both in terms of a feasible set optimisation and its marginal revenue and marginal cost. Why is there a deadweight loss in this case? (5) ii) Now assume the firm is a typical firm in a perfectly competitive market. Show the firm's optimal choice alongside the...
Suppose a monopolist faces one market with the following demand curve: ?2(?2) = 1000 − 2?2 Let the marginal cost be $20 per unit. What is the firm’s optimal output? What is the profit-maximizing price? Suppose the government requires the monopolist to charge a price that is equal to the socially optimal price. What is this price? What is the socially optimal level of output?
Firm W is a monopolist that faces market demand with elasticity equal to -2, and Firm W's profit maximizing price is $48/unit. Use the mark-up formula to infer Firm W's marginal cost per unit at its current output level.