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 profitQ4: 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 Gray Computer, Inc., located in Colorado Springs, Colorado, is a privately held producer of high-speed electronic computers with immense storage capacity and computing capability. AlthoughGray's market is restricted to industrial users and a few large government agencies (e.g., Depart-ment of Health, NASA, National Weather Service, etc.), the company has profitably exploited itsmarket niche. Suppose a potential entrant into the market for supercomputers has asked you toevaluate the short- and long-run potential of this market. The following market demand and costinformation has been developed:Р - 54 — 1,5QTC = 200 + 6Q + 0, 5Q²,

Given: P=54-1.5Q TC=200+6Q+0.5Q2 We know, Total Revenue (TR) = PXQ TR = 54Q -1.5Q2

Answered: Gray Computer, Inc., located in…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

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

Gray Computer, Inc., located in Colorado Springs, Colorado, is a privately held producer of high-
speed electronic computers with immense storage capacity and computing capability. Although
Gray's market is restricted to industrial users and a few large government agencies (e.g., Depart-
ment of Health, NASA, National Weather Service, etc.), the company has profitably exploited its
market niche. Suppose a potential entrant into the market for supercomputers has asked you to
evaluate the short- and long-run potential of this market. The following market demand and cost
information has been developed:
Р - 54 — 1,5Q
TC = 200 + 6Q + 0, 5Q²,

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