A profit-maximizing firm in a competitive market is currently producing and selling 1000 units of output. It has an average revenue of $13, and an average cost of $8. What is its marginal revenue? How much economic profit does it make? Given the firm's economic profit, what is expected to happen in terms of market supply, and equilibrium price and quantity? Why?
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- Suppose that BMW can produce any quantity of cars at a constant marginal cost equal to$50 and a fixed cost of $22,500. You are asked to advise the CEO as to what prices andquantities BMW should set for sales in Europe and in the United States to maximize its profits.The demand for BMWs in each market is given by:QE = 8,000 – 80PE and QU = 4,000 – 20 PU,where the subscript E denotes Europe, the subscript U denotes the United States. Assume thatBMW can restrict U.S. sales to authorized BMW dealers only. Support your answersgraphically as well.a. If, by an international agreement between Europe and United States, BMW wereforced to charge the same price in each market, what would be the quantity sold in eachmarket, the equilibrium price, and the company’s profit?b. Suppose now that Europe and United States signed a new trade package under whichBMW now can charge different prices across the two markets. What quantity of BMWsshould the firm sell in each market, and what should the price be…Question #5What is the MC=MR Profit Maximization point? What quantity should Delicious Deserts be producing at 'and' what price should they be charging to maximize their profits? Question #6 Why isn't it a good idea for them to produce and sell as many cakes as they can? Is it more profitable to sell less cakes at this current stage of their business? Question #7Do you have any other recommendations for Delicious Deserts to increase their revenues, profits, market share, and client retention?Assuming you are the managing director of a firm that produces three goods: A, Band C. The price elasticity of demand for A is 1.2, for B it is 1.00 and for C it is 0.75.It is known that he firm is experiencing serious cash flow problems and you have toincrease total revenue as soon as possible. If you were in a position to set the pricesfor these goods, what would be your pricing strategy for each product
- Suppose you are in charge to analyze the future price trend of a brand. What do you suggest about the price? What should be the change in it in future for market equilibrium if it is currently at P1 and also explain whether there is a surplus or a shortage in this current market?The Zinger Company manufactures and sells a line of sewing machines. Demand per period (Q) for a particular model is given by the following relationship:Q = 400 − .5Pwhere P is price. Total costs (including a "normal" return to the owners) of producing Q units per period are:TC = 20,000 + 50Q (a) Express total profits (π) in terms of Q. (b) At what level of output are total profits maximized? What price will be charged? What are total profits at this output level? (c) What model of market pricing has been assumed in this problem? Justify your answer.How would you characterize the nature of competition among small food companies? Are there submarkets with distinct competitive pressures? Are there important substitutes that constrain pricing? Given these competitive issues, how can an organic frozen foods producer be profitable?
- 12. given inverse demand curves, marginal cost, and output limit, determine a price when a firm uses peak-load pricing A firm decides to use peak-load pricing. Its demand function in the off-peak period is Q = 400 – 4P/3, and during the peak period is Q = 900 – 2P. The firm’s marginal cost is constant at $50 up to its peak capacity of 500 units. What price does the firm charge during the peak period?A6 You are the owner of a local Honda dealership. Unlike other dealerships in the area, you take pride in your “No Haggle” sales policy. Last year, your dealership earned record profits of $2.0 million. In your market, you compete against two other dealers, and the market-level price elasticity of demand for midsized Honda automobiles is -1.8. In each of the last five years, your dealership has sold more midsized automobiles than any other Honda dealership in the nation. This entitled your dealership to an additional 35 percent off the manufacturer’s suggested retail price (MSRP) in each year. Taking this into account, your marginal cost of a midsized automobile is $13,000. What price should you charge for a midsized automobile if you expect to maintain your record sales?2. Profit maximization of a seller in a competitive price-searchermarket Consider De Virtuose Cupcake, a cupcake shop in a competitive price-searcher market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Assume that the shop is operating in the short run. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity. If the shop is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. If the shop is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. At the profit-maximizing output and price, the shop’s profit is equal to --- Given the profit-maximizing choice of output and price, there are -- shops in the industry than there wwould be in long run equilibrium. Please show me your work. Graph is attached as a picture. Thanks, Nasima
- Now suppose there are 100 firms in this industry, all with identical cost schedules. Fill inthe market quantity supplied at each price in the market.Profit equals revenue minus cost. We have looked at costs. We now turn to revenue. Let us assume that firm S is a price In other words, it faces a (i) downward-sloping / horizontal (ii) demand curve / supply curve (Delete as appropriate.) Let us assume that it faces a market price of £2 per unit for its product. What is its total revenue from selling: (i) 5 units? ................................ (ii) 8 units? ................................ (c) What shape is its total revenue curve? ....................................................................................... (d) What will be its marginal revenue from selling: (i) the fifth unit? ................................ (ii) the eighth unit?…Suppose the firm faces a demand curve for its product P=32-2Q, and the firm's costs of production and marketing are C(Q)=2Q^2. Find the following; a. The formula for profit piein terms of Q b. The first order condition(FOC) and the second order condition(SOC) for maximum total revenue c. The price and quantity that maximizes total revenue, and the corresponding value of the total revenue. d.The FOC and SOC for maximum profit e. The price and quantity that maximize profit and the corresponding value of profit. f. What would the competitive price and quantity be, assuming C(Q)=2Q^2 represented the industry cost function