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=1,265-9Q The cost analysis department has estimated the total cost function for the poster bed as TC=-15Q² +5Q+24,000 Short-run profits are maximized when the level of output is The total profit at this price-output level is S 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? Price Charged Output Produced Profits Generated Increase No change Decrease and the price is S O O
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- 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.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=3,005−10Q The cost analysis department has estimated the total cost function for the poster bed as TC=Q33−15Q2+5Q+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…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=1,265−9Q�=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 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 = 1760 - 12QThe cost analysis department has estimated the total cost function for the poster bed asTC = (1/3)Q3 - 15Q2 + 5Q + 24,000a. Calculate the level of output that should be produced to maximize short-run profits. b. What price should be charged? c. Compute total profits at this price-output level. d. Compute the point price elasticity of demand at the profit-maximizing level of output. e. What level of fixed costs is the firm experiencing on its bed production? f. What is the impact of a $5,000 increase in the level of fixed costs on the price charged, output produced, and profit generated?Lefola Limited is the only manufacturer of product G_Easy in the Popa Land. It has provided documented levels of demand at certain selling prices for product G_Easy which are as follows: Price per unit Demand Units Total costs 7 000 0 3 000 6 000 1 5 000 5 000 2 8 000 4 000 3 12 000 3 000 4 17 000 2 000 5 23 000 1 000 6 30 000 Required: Using a tabular approach, calculate the marginal revenues and marginal costs for product G_Easy at the different levels of demand, and so determine the selling price at which Lefola Limited’s profits are maximized.The industry demand function for bulk plastics is represented by the following equation:P = 800 - 20Qwhere Q represents millions of pounds of plastic.The total cost function for the industry, exclusive of a required return on invested capital, isTC = 300 + 500Q + 10Q2where Q represents millions of pounds of plastic.a. If this industry acts like a monopolist in the determination of price and output, compute the profit-maximizing level of price and output.b. What are total profits at this price and output level?c. Assume that this industry is composed of many (500) small firms, such that the demand function facing any individual firm isP = $620Compute the profit-maximizing level of price and output under these conditions (the industry’s total cost function remains unchanged).d. What are total profits, given your answer to Part (c)?e. Because of the risk of this industry, investors require a 15 percent rate of return on investment. Total industry investment amounts to $2 billion. If the…
- The cost function for producing ethanol from municipal waste (wastehol) is 1000+10q2 where q is in millions/gallons per year. The demand for wastehol is currently perfectly inelastic at 5 million gallons per year. Assume that producers of wastehol are perfectly competitive. California is deciding whether to convert all wastehol producers into a regulated wastehol utility. If wastehol is a regulated monopoly utility with the cost function above, what price would regulators set as the price of wastehol? Now assume that the wasteahol market has boomed and demand has grown to 20 (again million gallons per year). Now what is the regulated price of wastehol? You are the wastehol producer and are trying to decide whther to lobby for deregulating the wastehol industry. If wastehol were deregulated, if demand remains 20, what would the perfectly competitive price be? If you are a wastehol customer, you would prefer a deregulated industry if demand were 20? True/False?Bosch claims to be the leader in terms of energy efficiency in the washing machine market and produces a special-design motor that is used in the manufacturing of its washing machines. The market demand and the total cost for Bosch’s washing machines are estimated as follows: P = 3,200 – 0.20Q TCwashing machine = 60,000 + 1,280 Q + TCMotor In this equation, Q is the number of washing machines sold per month, P is the TL price of washing machines, TCMotor is Bosch’s total cost of manufacturing the special-design motors in TL. In addition, TCMotor is estimated to be TL160 per motor without any additional fixed costs. a. As a result of its special design, the motors can be used only in the manufacturing of Bosch washing machines with no external market. Determine the profit-maximizing number of washing machines Bosch should manufacture and sell. Explicitly state the transfer price that Arçelik should set for the special-design motors.How does derived demand apply to the demand for passenger-jet engines? What are the implications for GE’s marketing efforts?
- Motorcycles USA is a company that manufactures and distributes motorcycles in North America. It has the following demand function for its motorcycles: P = 40,000 – 100Q Motorcycles USA has a marginal cost (MC) that is constant and equal to $6,000. What will Motorcycles USA’s price be if it decides to distribute the motorcycles by itself? What will the price be if it sells them through MC Dealership, LLC an independent distributor? Should Motorcycles USA distribute the motorcycles by itself or through MC Dealership, LLC? What factors would you consider when making this decision? Be sure to explain your calculationsThe 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?AVAC is the only pharmaceutical firm producing a Vaccine. The Demand Curve for its product is Qd = 250 – 50 P where P is Price and Q are packs of vaccines in ‘000 Total Cost Function estimated by the firm is TC = 15 + 0.5Q where Q is monthly output. What is the market structure of AVAC? State its characteristics. To maximize profit. What will be the optimum price and how many packs of Vaccine should the firm produce and sell per month? If this number of packs is produced and sold, what will be the firm’s monthly profit? Using available information, draw AVAC’s demand, marginal revenue and marginal cost curves in a graph and clearly label the firm’s profit maximizing price, quantity and profit. Do you observe any welfare loss? If so, also indicate and label the area on the graph. Assume all other pharmaceutical firms in the market start producing the Vaccine and the market becomes competitive. What will be the impact on price and marginal revenue? Would the market…