1) The Fox Company has market power (faces a downward-sloping demand curve). The industry's total cost...
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 diagram to show the outcomes for the above bullet points. Holding marginal cost equal, how does the shape of the demand curve impact the ability of the firm to charge a higher price?
Homework Answers
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1) The Fox Company has market power (faces a downward-sloping
demand curve). The industry's total cost...
57. A profit-maximizing monopolist faces a downward-sloping demand curve that has a constant elasticity of -3....
57. A profit-maximizing monopolist faces a downward-sloping demand curve that has a constant elasticity of -3. The firm finds it optimal to charge a price of $12 for its output. What is its marginal cost at this level of output?
3. Suppose that Bob's widgets faces a downward sloping demand curve given by Q 100-4P. If...
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?
The inverse demand curve a monopoly faces is p = 100-2Q. The firm's cost curve is...
The inverse demand curve a monopoly faces is p = 100-2Q. The firm's cost curve is C(Q)=30+6Q. What is the profit-maximizing solution? The profit-maximizing quantity is _____. (Round your answer to two decimal places.) The profit-maximizing price is $_____ (round your answer to two decimal places.)
6. The Power Tires Company has man in the figure. The firm's marginal cost company has...
6. The Power Tires Company has man in the figure. The firm's marginal cost company has market power and faces the demand curve shown im's marginal cost and marginal revenue curve are MC = 30+32 MR = 300 -69 Price ($/tire) $300 - 100 Quantity of tires (thousands) Answer the following questions: a. What are the firm's profit-maximizing output and price? b. If the firm's demand declines to P= 240-20, what is the firm's profit- maximizing level of output and...
A metal-producing firm has market power. Its MC curve can be represented by MC=60+2q, and it...
A metal-producing firm has market power. Its MC curve can be represented by MC=60+2q, and it faces a demand curve of P=200-1.5q. What is the profit-maximizing output? Price? Provide a graph to supplement your analysis. (Note MR=200-3q). What would the price and quantity be if this market were perfectly competitive (ie. these Demand and MC curves were those for the market as a whole, with many firms)? What is the deadweight loss associated with the market power in this case?
If a profit-maximizing monopolist faces a downward-sloping market demand curve, what do we know? ( Its...
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?
14) If a firm faces a downward-sloping demand curve a. it will always make a profit....
14) If a firm faces a downward-sloping demand curve a. it will always make a profit. b. it can control both price and quantity sold. c. it must reduce its price to sell more output. d. the demand for its product must be inelastic.
Suppose a firm has market power and faces a downward-sloping demand curve for its product, and...
Suppose a firm has market power and faces a downward-sloping demand curve for its product, and its marginal cost curve is upward sloping. If the firm reduces its price, then A. producer surplus increases due to new buyers, but the producer surplus from existing customers declines due to the lower price. B. the sum of producer and consumer surplus remains the same, but surplus value is transferred from the producer to consumers. C. the change in producer surplus is transferred...
A monopolist has market power because it O Is a price taker. Faces a downward-sloping demand...
A monopolist has market power because it O Is a price taker. Faces a downward-sloping demand curve for its own output. O Can raise price as much as it wishes and not lose any customers. 0 Is regulated by the government. none of the Answers are correct.
A firm with market power faces a demand curve: PD = 75 - 0.7Q and its cost...
A firm with market power faces a demand curve: PD = 75 - 0.7Q and its cost function is: TC = 348 + 12Q - 1.28Q2 + 0.062Q3 What is the firm's profit-maximizing output, What is the firm's maximum profit, What is the firm's markup of price over marginal cost
57. A profit-maximizing monopolist faces a downward-sloping demand curve that has a constant elasticity of -3. The firm finds it optimal to charge a price of $12 for its output. What is its marginal cost at this level of output?
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 $2 per unit, what is his profit maximizing level of output? His profit maximizing price?
6. The Power Tires Company has man in the figure. The firm's marginal cost company has market power and faces the demand curve shown im's marginal cost and marginal revenue curve are MC = 30+32 MR = 300 -69 Price ($/tire) $300 - 100 Quantity of tires (thousands) Answer the following questions: a. What are the firm's profit-maximizing output and price? b. If the firm's demand declines to P= 240-20, what is the firm's profit- maximizing level of output and...
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A monopolist has market power because it O Is a price taker. Faces a downward-sloping demand curve for its own output. O Can raise price as much as it wishes and not lose any customers. 0 Is regulated by the government. none of the Answers are correct.
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