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- Inverse elasticity rule Use the first-order condition (Equation 15.2 ) for a Cournot firm to show that the usual inverse elasticity rule from Chapter 11 holds under Cournot competition (where the elasticity is associated with an individual firm's residual demand, the demand left after all rivals sell their output on the market). Manipulate Equation 15.2 in a different way to obtain an equivalent version of the inverse elasticity rule: pMCp=sieQ,p , where si=qi/Q is firm i's market share and eQp is the elasticity of market demand. Compare this version of the inverse elasticity rule with that for a monopolist from the previous chapter.Ajax Cleaning Products is a medium-sized firm operating in an industry dominated by one large firm—Tile King. Ajax produces a multiheaded tunnel wall scrubber that is similar to a model produced by Tile King. Ajax decides to charge the same price as Tile King to avoid the possibility of a price war. The pnce charged by Tile King is $20,000. Ajax has the following short-run cost curve: TC=800,0005,000Q+100Q2 Compute the marginal cost curve for Ajax. Given Ajaxs pricing strategy, what is the marginal venue function for Ajax? Compute the profit-maximizing level of output for Ajax. Compute Ajaxs total dollar profits.X company is a monopoly. Demand equation in this market is given as: ? = 100 − 2P and total cost equation is as the following: ?? = 2? 2 + 10. Find monopoly quantity, price and profit.
- Give only typing answer with explanation and conclusion The market demand for a monopoly firm is estimated to be: Qd = 100,000 - 500P + 2M + 500PR where Qd is quantity demanded, P is price, M is income, and PR is the price of a related good. The manager has forecasted the values of M and PR will be $50,000 and $20, respectively, in 2016. The average variable cost function is estimated to be AVC = 520 - 0.03Q + 0.000001Q2 Total fixed cost in 2016 is expected to be $4 million. The profit-maximizing price for 2016 is $80. $100. $260. $520. $560.If the demand of a Monopolist is as follows: Qd = 5500-12P And the TC function is equivalent to the following function: Total Cost = 8000 + Q2 a) Determine the level of production where profit is highest. b) Graph situation of the monopolistIn the 1928, Knoxville was served by a single railroad line. Because alternative forms of transportation were not close substitutes for rail transportation in 1928, this railroad had a transportation monopoly in Knoxville. The estimated monthly fixed cost associated with operating a railroad was $1,200. In addition, there was a constant average variable cost and marginal cost of $0.02 per ton-mile associated with the railroad's operation. The estimated monthly demand for transportation on the railroad was: Qd = q = 80,000 - 1,000,000P where Qd was the monthly quantity demanded in ton-miles and P was the price per ton-mile in dollars. Based upon the above equation, answer the following questions: a. What is the profit-maximizing price and quantity? b. Would a private company build the railroad? c. What is the socially optimal price and quantity?
- Assume inverse demand function for game console in an imaginary country is P=1200-4Q and the total cost function is TC=400+4Q2. Government put $120 of specific tax on production. If the market is competitive what is the incidence of tax on consumer? If the market is monopolist what is the incidence of tax on consumer?1. Two firms compete in a market to sell a homogeneous product with inversedemand function P = 960-6Q. Each firm produces at a constant marginal cost of$60 and has no fixed costs.c. Assuming the firms collude and act as a monopolist, computei. Equilibrium price and quantityii. Total profitsiii. Consumer surplusiv. Total welfare loss relative to perfect competition (if any)Q1: Calculate MR and MC function Q2: Calculate output, price and economic profits earned by the company as a monopolist. Q3: Calculate the range which a long-run equllibrium price/output combination would be found for individual firms if entry eliminated Gray's economic profit Q4: Assume the price point elasticity of demand calculated in Q2 is a good estimate of the relevant arc price elasticity. What is the potential overall market size for super computers? Q5: Should your company enter the market for supercomputers? Short explain
- A monopolist seller of Irish ceramics faces the following demand function for its product: P = 62 - .25Q. The fixed cost is $20 and the average variable cost per unit is $.5. What is the profit maximizing quantity for this monopoly? The price elasticity of demand at the monopoly price is _____ Please do fast ASAP fastDiminishing marginal returns implies:. Single choice. a.Decreasing average variable costs b.Decreasing marginal costs c.Increasing marginal costs d.Decreasing average fixed costs In pure monopoly, what is the relation between the price and the marginal revenue?. Single choice. a.the price is greater than the marginal revenue b.the price is less than the marginal revenue c.there is no relation d.they are equal In the figure, if the total cost of producing 99 units of output per day is $475, the marginal cost of producing the 100th unit of output per day is approximately. Single choice. a.zero. b. $25. c. $475. d. $500. The burden (incidence) of a tax will fall mainly on the producers if:. Single choice. a.The producers are the ones legally obliged to pay the tax. b.Supply is inelastic and demand is elastic. c.Demand is inelastic and supply is elastic. d.There are many producers in the market. The need for the…CHP is a monopoly manufactorer who faces tbge following demand curve for its product in two different country: United States ( US) and New Zealand (NZ). US = Q(us) = 200 - P(us) and new zealand: Q(nz) = 150 - 1/2 P(nz). in which Q denotes quantity and p denotes prices. the firm also faces cost function of c(Q) = 0.25 (Qus + Qnz)^2. Find the prices, pUS and pNZ, which maximise CHP profits, assuming no capacity constraints.