3. You are the manager of a monopolistically competitive firm, and your demand and cost functions are estimated as Q = 36 – 4P and C = 4 + 4Q + Q². a) Find the inverse demand function for your firm's product. b) Determine the profit-maximizing price and level of production.
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- Suppose a monopolistically competitive firm operates in a long run which produces 40 units of output at 120 taka per-unit cost (average total cost). Also MC of producing 40 unit output is 60 taka. By using this information, show the long run situation of a monopolistically competitive firm in an appropriate diagram.Explain how either economic profit or loss minimization could be representative of the short-run profitability realized by firms within a monopolistically competitive market, but breakeven or normal profit, represents the definitive long-run profitability that will come to exist for the firms operating in that market.You are the manager of a monopolistically competitive firm, and your demand and cost functions are given by Q = 36 – 4P and C(Q) = 4 + 4Q + Q2. a. Find the inverse demand function for your firm’s product. b. Determine the profit-maximizing price and level of production. c. Calculate your firm’s maximum profits. d. What long-term adjustments should you expect? Explain.
- Q)Is the statement Price is equal to average total cost true for a monopolistically competitive firm and a perfectly competitive firm in the long-run equilibrium and why?A firm in monopolistic competition produces an output level Q1 = 100 where marginal revenue is equal to marginal cost. At this output level, the price is P1 = $75 and the average total cost is ATC1 = $25. 1. Draw the graph for the monopolistically competitive firm in the short-run equilibrium using the numbers provided above (include ATC, D, MC, and MR curves). Label everything! 2. At this output of Q1 = 100, calculate: total revenue (TR), total cost (TC), and profit in the short-run. Show your work (formulas and calculations). 3. On the graph, show the markup and the excess capacity for this firm. 4. In the long run, what will happen to the profit earned by the firm? 5. Draw the graph for the monopolistically competitive firm in long-run equilibrium.Question 3 In a monopolistically competitive industry, firms set price Group of answer choices equal to marginal cost since each firm is a price taker. below marginal cost since each firm is a price taker. above marginal cost since each firm is a price setter. always a fraction of marginal cost since each firm is a price setter.
- You are the manager of a monopolistically competitive firm, and your demand and cost functions are given by Q= 36 - 4P and C(Q)=4+4Q+Q^2. What long-run adjustments should you expect? Explain. What is the value of the consumer surplus (under monopoly)? Calculate the deadweight loss (under monopoly). What is the value of the Lerner Index? Explain what this number means.You are the manager of a monopolistically competitive firm, and your demand and cost functions are given by Q = 36 − 4P and C(Q) = 4 + 4Q + Q2a. Find the inverse demand function for your firm’s product. b. Determine the profit-maximizing price and level of production. c. Calculate your firm’s maximum profits. d. What long-run adjustments should you expect? ExplainThe mobile phone industry is monopolistically competitive, and is described by Diagram A and Diagram B above. Samsung pursued a successful differentiation strategy and, as a result, is making a positive economic profit in the short run. PART A: Which diagram (Diagram A or Diagram B) represents Samsung’s situation in the short run and long run, respectively? PART B: Referring to the short-run diagram you selected in part a, identify Samsung’s short-run profit maximising output and explain how Samsung decided to produce this output. PART C: What is the price of each mobile phone? How much profit is Samsung making in the short run? Explain. PART D: Identify the area that represents consumer surplus. PART E: Explain how the other firms producing mobile phones would react to Samsung’s short-run positive economic profit. What would be the long-run impact on Samsung’s output, price and profit? Illustrate your answer with the long-run diagram you identified in part A. PART F:…
- How would a monopolistically competitive firm determine its profit maximizing level of output and price? Group of answer choices 1-The firm would use industry averages to determine the profit maximizing level of output and price. 2-A monopolistically competitive firm could set any output and price level to yield maximum profit because it controls all of the resources. 3-The firm would determine output based on the intersection of marginal cost and marginal revenue, then examine where that output level intersects with the demand curve to determine the price. 4-The firm would determine output based on the intersection of average cost and marginal cost, then examine where that output level intersects with the supply curve to determine the price.You are the manager of a monopolistically competitive firm, and your demand and cost functions are given by Q = 36 – 4P and C(Q) = 124 + 16Q + Q2.a. Find the inverse demand function for your firm’s product b. Determine the profit-maximizing level of production and price. Quantity: ? Price: ? c. Calculate your firm's maximum profits. d. I expect profit to (blank), price to (blank), and quantity to (blank).You are the manager of a monopolistically competitive firm and your demand and cost functions are given by Q2 = 10 – (0.1) P2 and C=490 - 50Q + 2.5 Q2 Find the inverse demand function for your firm product Determine the profit maximizing price and level of production Calculate your firm’s surplus and maximum profits