Suppose that a price setting firm has the following direct demand function: Qd = 100-20P a....
Suppose that a price setting firm has the following direct demand function:
Qd = 100-20P
a. Find the inverse demand curve. What is it’s slope and it’s intercept.
b. Find the equation for Total Revenue where TR is a function of Q.
c. Find the equation for Marginal Revenue, where MR is a function of Q.
d. What is the quantity where Total Revenue is maximized? How is this related to Marginal Revenue?
e. Calculate the own price elasticity of demand at the quantity where Total Revenue is maximized.
f. Calculate the own price elasticity demand at a price of $2.A decrease in price below $2.00 will do what to Total Revenue? To Marginal Revenue? Why? Hint: Drawing the two graphs (the one with D and MR drawn against Q and the second with TR drawn against Q. Show the initial price, quantity and TR and the new price, Quantity and TR. Explain your results in words, making sure to use the concept of elasticity and your graphs.
g. Suppose now that the firm is a profit maximizing firm, and that MC = 2.5 + .025Q. Find the profit maximizing output and price. Calculate the own price elasticity of demand at the profit maximizing price and output.
h. Given your results, is there a difference between maximizing Revenue (part d) and maximizing profits (part g). Why?
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Suppose that a price setting firm has the following direct
demand function:
Qd = 100-20P
a....
Question 2: A monopolistic firm produces goods in a market where the demand function is P...
Question 2: A monopolistic firm produces goods in a market where the demand function is P = 43 - 0.3Q and the corresponding total cost function is TC =0.0103 – 0.4Q2 +3Q (a) What can you say about the fixed costs of this firm? (b What can you say about the variable costs of this firm? (c) Find the (non-zero) output for which average cost is equal to marginal cost, and explain the significance of this value. (d Find the...
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A company produces patented fasteners by the thousands. Its demand function is QD = 8000 -...
A company produces patented fasteners by the thousands. Its demand function is QD = 8000 - (1000/3) P, and its total cost is TC = 3,000 + 10Q + 0.004Q2 , the marginal cost MC = 10 + 0.008Q. Where Q is output in thousands produced and sold and P is the price per thousand fasteners. a. Find the inverse demand and marginal revenue functions. b. Determine the profit-maximizing level of output. c. What price will the company charge? d....
1. Suppose that a single-price monopolist faces the demand function P 100 Q where I is...
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17. To maximize profits, a firm must choose its quantity at the point where... a. Total revenue (TR) - total cost (TC). b. Marginal revenue (MR)= marginal cost (MC). c. MR-MC is maximized. d. TR is maximized. 18. For a profit maximizing monopoly that uses the same price for all its customers, which of the following is true at the monopoly's profit maximizing quantity? a. MR =P b. MC-P. c. MR>P. d. MC>P. e. MR<P
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the firm faces a constant price (P) of $60 A firm in a perfectly competitive market...
the
firm faces a constant price (P) of $60
A firm in a perfectly competitive market sells all its product (Q) at a constant price (P) of $60. Suppose the total cost function (TC) for this firm is described by the following equation: 2 3 TC(Q) = 128 + 69Q - 140 + Q (a)Form the profit function and determine the output that maximizes the firm's profit. Evaluate the second order condition to assure that profit is maximized at this...
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#1
1. A firm has the following demand and total cost schedule. TR Profit MR MC O 0 10 20 30 40 50 60 P 100 90 80 70 60 50 40 TC 200 400 600 800 800 1,000 1.200 1.400 a) Is the firm a price-taker or price searcher? Explain. b) Complete the Total Revenue (TR) and Profit schedules. c) How many units of output (Q) should the firm produce to maximize profits? d) What price (P) should the...
(1)A firm in a perfectly competitive market sells all its product (Q) at a constant price...
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Question 2: A monopolistic firm produces goods in a market where the demand function is P = 43 - 0.3Q and the corresponding total cost function is TC =0.0103 – 0.4Q2 +3Q (a) What can you say about the fixed costs of this firm? (b What can you say about the variable costs of this firm? (c) Find the (non-zero) output for which average cost is equal to marginal cost, and explain the significance of this value. (d Find the...
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the
firm faces a constant price (P) of $60
A firm in a perfectly competitive market sells all its product (Q) at a constant price (P) of $60. Suppose the total cost function (TC) for this firm is described by the following equation: 2 3 TC(Q) = 128 + 69Q - 140 + Q (a)Form the profit function and determine the output that maximizes the firm's profit. Evaluate the second order condition to assure that profit is maximized at this...
#1
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