1. Based on the best available econometric forecasts, market elasticity demand for your company's products is -2.5. Marginal cost to produce product is constant at $ 140. Determine the optimal price per unit, if:

a.You are a monopolist.

b.You compete with one another in the Cournot oligopoly.

c.You are competing with 9 other companies in the Cournot oligopoly.

2. The water pump company has succeeded in introducing a water pump that saves electricity, is easy to install, and is durable (guaranteed). Its high quality has given the company an early edge in the local and national markets, but the entry of highly skilled competitors may occur within the next 3 years. Assume that the income and expense relationship of the company is as follows:

TR = 22000Q - 15.6Q2

MR = dTR / dQ = 22000 - 31.2Q TC = 300000 + 4640Q + 10Q2

MC = dTC / dQ = 4640 + 20Q

Where TR is income (in thousands of rupiah), Q is quantity (in units), MR is marginal income (in thousands of rupiah), TC is total cost, including a risk-adjusted normal rate of return on investment (in thousands of rupiah), and MC is the marginal cost (in thousands of rupiah).

a. Compute: the profit-maximizing price-output combination.

b. Compute: long-run equilibrium high-price / low-output.

c. Compute: long-run low-price / high-output equilibrium

3. Johnny's company provides a on-call service to provide garden maintenance / tidying services in several residential areas at a regular price of $ 400, covering maintenance / trimming and spraying of fertilizers and chemical pests. In an effort to attract new customers, the company offered its customers a $ 80 discount off the regular price. It turned out that this decision was greeted enthusiastically and customers increased to 5,500 units (packages) from 3500 units recorded in the same period last year.

a. Compute: Arc price elasticity of demand for service company “ABC”.

b. It is assumed that the Arc price elasticity in item a is the best available estimate of the Point price elasticity of demand. If the marginal cost is $ 150 per unit for labor and materials. Compute: Optimal mark-up on price, and Optimal price for Johnny's company services.

4. A steel factory produces steel with

Marginal external cost: MCExternal = 4Q

Marginal internal cost: MCInternal = 7Q

Inverse demand for steel: P = 110 – Q

a. Compute: socially efficient output.

b. Calculate: output produced by a competitive industry.

c. Calculate: the output produced by the monopoly industry.

Question

1. Based on the best available econometric forecasts, market elasticity demand for your company's products is -2.5. Marginal cost to produce product is constant at $ 140. Determine the optimal price per unit, if:

a.You are a monopolist.

b.You compete with one another in the Cournot oligopoly.

c.You are competing with 9 other companies in the Cournot oligopoly.

2. The water pump company has succeeded in introducing a water pump that saves electricity, is easy to install, and is durable (guaranteed). Its high quality has given the company an early edge in the local and national markets, but the entry of highly skilled competitors may occur within the next 3 years. Assume that the income and expense relationship of the company is as follows:

TR = 22000Q - 15.6Q2

MR = dTR / dQ = 22000 - 31.2Q TC = 300000 + 4640Q + 10Q2

MC = dTC / dQ = 4640 + 20Q

Where TR is income (in thousands of rupiah), Q is quantity (in units), MR is marginal income (in thousands of rupiah), TC is total cost, including a risk-adjusted normal rate of return on investment (in thousands of rupiah), and MC is the marginal cost (in thousands of rupiah).

a. Compute: the profit-maximizing price-output combination.

b. Compute: long-run equilibrium high-price / low-output.

c. Compute: long-run low-price / high-output equilibrium

3. Johnny's company provides a on-call service to provide garden maintenance / tidying services in several residential areas at a regular price of $ 400, covering maintenance / trimming and spraying of fertilizers and chemical pests. In an effort to attract new customers, the company offered its customers a $ 80 discount off the regular price. It turned out that this decision was greeted enthusiastically and customers increased to 5,500 units (packages) from 3500 units recorded in the same period last year.

a. Compute: Arc price elasticity of demand for service company “ABC”.

b. It is assumed that the Arc price elasticity in item a is the best available estimate of the Point price elasticity of demand. If the marginal cost is $ 150 per unit for labor and materials. Compute: Optimal mark-up on price, and Optimal price for Johnny's company services.

4. A steel factory produces steel with

Marginal external cost: MCExternal = 4Q

Marginal internal cost: MCInternal = 7Q

Inverse demand for steel: P = 110 – Q

a. Compute: socially efficient output.

b. Calculate: output produced by a competitive industry.

c. Calculate: the output produced by the monopoly industry.

Accepted Answer

“Since you have asked multiple questions, we will solve the first question for you. If you want any…