The expected demand functions for a firm under monopolistic competition are given by: P1 = 810 – 3.5Q in year 1, P2 = 540 – 3.5Q in year 2, and P3 = 174 – 3.5Q in year 3. The cost function is given by C(Q) = 1,200 + 2.8Q2. What are profits in year 3?
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The expected demand functions for a firm under
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- The Poster Bed Company believes that its industry can best be classified as monopolistically competitive. An analysis of the demand for its canopy bed has resulted in the following estimated demand function for the bed: P=1,760−12Q�=1,760−12� The cost analysis department has estimated the total cost function for the poster bed as TC=Q33−15Q2+5Q+24,000TC=�33−15�2+5�+24,000 Short-run profits are maximized when the level of output is and the price is . The total profit at this price-output level is . The point price elasticity of demand at the profit-maximizing level of output is . The level of fixed costs the firm is experiencing on its bed production is . What is the impact of a $5,000 increase in the level of fixed costs on the price charged, output produced, and profit generated? Increase No change Decrease Price Charged Output Produced Profits GeneratedThe Poster Bed Company believes that its industry can best be classified as monopolistically competitive. An analysis of the demand for its canopy bed has resulted in the following estimated demand function for the bed: P=1,265−9Q�=1,265−9� The cost analysis department has estimated the total cost function for the poster bed as TC=Q33−15Q2+5Q+24,000TC=�33−15�2+5�+24,000 Short-run profits are maximized when the level of output is and the price is . The total profit at this price-output level is . The point price elasticity of demand at the profit-maximizing level of output is . The level of fixed costs the firm is experiencing on its bed production is .The demand and total cost functions for a monopolistically competitive market are: Q(P) = 300/N – P, where N = number of firms TC(Q) = 50 + Q² In the long run, how many firms are in the market (round to the nearest integer
- The market structure of the local pizza industry is best characterised by monopolistic competition. Pizza Shack is one of the producers in the local market.The market demand for Pizza Shack is: Qd = 225 – 10P.Pizza Shack’s cost function is: C(Q) = 0.15Q^2Where Q^2 refers to q squared2. Re-write the demand function in price form:The demand function for a monopolistically competitive firm's product is Q = 100 – 4P, while the firm's cost function is C = 500 + 10Q + 0.5Q2.(a) Determine the firm's equilibrium price and quantity.(b) Is the firm in long-run equilibrium? If not, what is expected to happen in the long run if the firm remains in the industry?There are two firms, Firm 1 and Firm 2. The two firms’ products are viewed as identical by most consumers. The relevant cost functions are C(Q1) = 10 + 4Q1 and C(Q2) = 12 + 16Q2, and the market demand curve for product is given by P = 50 – 4Q. Instructions: Use no decimals. Use the average cost to calculate monopoly profits. Do not round values if used to complete other calculations. Complete the following table. Q1 Q2 P Profits F1 Profits F2 Duopoly competition Collusion
- Suppose Medic Inc. has a patent for a new pill called Relieve, which alleviates Restless Leg Syndrome (RLS) and is approved to sell its products in two separate markets – USA and Canada. The inverse demand function in USA is given by PU = 24 - QU and the inverse demand function in Canada is given by PC = 12 - 0.5QC. Therefore the total revenue function for USA is given by TRU = 24QU - QU2 and the total revenue function for Canada is given by TRC = 12QC - 0.5QC2 . Relive is sold in strip of 10 pills and the marginal cost of producing each strip is $6.00. PU = Price in USA in US dollars; PC = Price in Canada in US dollars; QU = Quantity sold in USA; QC = Quantity sold in Canada. What will be the profit from the US market? a. $72.00 b. $45.00 c. $81.00 d. $0.00Suppose a monopolistically competitive firm is in long-run equilibrium. The firm's demand curve is tangent to its average cost curve at Q = 25. Average cost is minimized at Q = 35, where average cost is $50. Which of the following is true? Group of answer choices This firm maximizes profit at an output level of 35 units. This firm maximizes profit at an output level lower than 25 units. This firm maximizes profit at an output level of 25 units. This firm incurs an economic loss in the long run. This firm maximizes profit at an output level greater than 35 units.A monopolistic company has to spend exactly $3000 as total cost for the production of a number of Basic Science and Mathematics textbooks for three schools. The Basic Science textbook sells at P1 = 455 – Q1 – Q2 and the Mathematics textbook at P2 = 910 – Q1 – 4Q2 where P1 and P2 denote the prices; Q1 and Q2 denote the number of Basic science and mathematics textbooks produced respectively. The joint cost of producing these textbooks is given as TC = 5Q1 + 10Q2(i) Find the maximum profit the producer can make(ii) Estimate the new profit if the company decides to reduce the total costby $50 (Assume that 2nd order conditions are satisfied) Question 2A monopolistic producer of two goods, G1 and G2, has a joint total cost function as ?? = 10?1 + 4?1?2 + 5?2Where Q1 and Q2 denote the quantities of G1 and G2 respective. If P1 and P2denote corresponding prices then the demand equations are P1 =50–1.5Q1 +Q2P2 =52.5+Q1 –1.5Q2(a) Find the total revenue function for the monopolist(b) Find the…
- Q55 Monopolistic competition is similar to perfect competition in that... a. Firms in both types of market structure engage in non-price competition. b. Strategic behaviour is common to both market structures. c. Firms in both types of market structures produce a standardised product. d. Neither has significant barriers to entry. e. Each firm faces a horizontal demand curve.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.Building on problem 5.3 in chapter 5, consider the CES utility function written as in (8.2), (c) Also show that equation (8.9) holds, which we re-write as: Problem 5.3 Suppose that industry 1 is monopolistically competitive, with a CES sub-utility function as described in problem 5.2. We let the marginal costs be denoted by c1(w,r), and the fixed costs in the industry by αc1(w,r). That is, the fixed costs use labor and capital in the same proportions as the marginal costs. Industry 2 is a competitive industry, and each industry uses labor and capital. (a) Write down the relationship between the prices of goods and factor prices. Does the StolperSamuelson Theorem still apply? (b) Write down the full-employment conditions for the two factors. Does the Rybczynski Theorem still apply in some form? How are your answers to (a) and (b) affected if the fixed costs in industry 1 uses different proportions of labor and capital than the marginal costs? Problem 5.2 In…
