Assume that a monopoly’s price elasticity of demand is –2.8. If the firm’s marginal cost is $36, what price should the firm charge in order to maximize profit?
A) 64
B) 42
C) 90
D) 56
E) 72
Assume that a monopoly’s price elasticity of demand is –2.8. If the firm’s marginal cost is...
1. A monopoly’s total cost function is TC = 200 + 8Q + 4Q2. The inverse demand function is P = 400 – 10Q. What will be the monopoly’s profit if it charges a single price to all customers? Group of answer choices a.$2,150 b.$3,420 c.$3,640 d.$2,544 $1,980 2. A Cournot oligopoly has four firms in the industry. The market price elasticity of demand is –2.5 and the marginal cost of production is $200. What is the profit-maximizing price, rounded...
Assume that the price elasticity of demand for a good is -1.2, and the firm's marginal cost is $2. What price should the firm charge to maximize profits? a. $24 b. $20 c. $18 d. $16 e. $12
Assume a first estimate their price elasticity of demand (EQxPx) to be -3.5, and their marginal cost to be $15. 3. Assume a firm estimate their price elasticity of demand (EQxPx) to be -3.5, and their marginal cost to be $15. a. Using the mark-up rule, what is the optimal price for the firm to charge? 2 points b. Confirm that your answer above is correct, by computing the profit maximizing quantity and price using MR = MC if the...
Firm A has price elasticity of demand of –1.5 and a marginal cost of $30. Firm B has a price elasticity of demand of –2.0 and a marginal cost of $30. What is the profit maximizing price of each firm?
Question 9 1 pts Which of the following is correct regarding penetration pricing? There is more than one answer to this question. You must mark all of the answers to receive full credit for this question. It is a strategy that is commonly found among perfectly competitive firms. It is used by firms with a long history in an industry that try to capture sales from new firms that are entering the industry. It is a strategy that is defined...
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...
The table below shows the demand and cost data for a monopolist in a small town (a) Fill in the missing columns. (b) What output will the monopolist produce? (c) What price will the monopolist charge? (d) What total profit will the monopolist receive at the profit-maximizing level of output? (e) Draw the demand curve for the monopolist's product, the MR curve and the MC curve for the firm. You may draw it freehand and submit the photo. quantity price...
2. Suppose that econometricians at Hallmark Cards determine that the price elasticity of demand for greeting cards is -3. 1. If Hallmark's marginal cost of producing cards is constant and equal to $1.00, use the Lerner index to determine what price Hallmark should charge to maximize profit. 2. Hallmark hires you to estimate the price elasticity of demand faced by its archrival, American Greetings. Hallmark estimates that American's marginal cost of producing a greeting card is $1.50. You note that...
If the marginal cost of making a photocopy is 3 cents and the elasticity of demand is –2, the profit-maximizing price is: a. 5 cents b. 8 cents c. 6 cents d. 3 cents e. 7 cents
The price elasticity of demand for the output of a profit-maximizing firm is E = −4. This firm will mark up the price of its product above marginal cost by __________ percent. A. 25 B. 50 C. 100 D. 150 E. None of the options