There is a monopolist, Concrete Mex, in the concrete market in Mexico. The demand function is Qd= 100-50p. The marginal cost of production is c = 0.4. a) Suppose ConcreteMex is a price taker in the competitive market in Texas. If the market price in Texas is Pc= 0.4, what is ConcreteMex’s supply Qs and profit in Texas? What is its supply if the price is Pc = 3? b) In a diagram, illustrate how the marginal cost and average total cost in Texas vary as a function of Q, and how ConcreteMex’s supply in Texas varies with price Pc. c) If the price in Texas is ?! = 3, what is ConcreteMex’s profit at its optimal supply in part a? Is the profit positive (or equal to zero)? Explain why the firm can earn positive (zero) profit in the competitive market.

There is a monopolist, Concrete Mex, in the concrete market in Mexico. The demand function is Qd= 100-50p. The marginal cost of production is c = 0.4. a) Suppose ConcreteMex is a price taker in the competitive market in Texas. If the market price in Texas is Pc= 0.4, what is ConcreteMex’s supply Qs and profit in Texas? What is its supply if the price is Pc = 3? b) In a diagram, illustrate how the marginal cost and average total cost in Texas vary as a function of Q, and how ConcreteMex’s supply in Texas varies with price Pc. c) If the price in Texas is ?! = 3, what is ConcreteMex’s profit at its optimal supply in part a? Is the profit positive (or equal to zero)? Explain why the firm can earn positive (zero) profit in the competitive market.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter8: Monopoly

Section: Chapter Questions

Problem 15SQ

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Question

There is a monopolist, Concrete Mex, in the concrete market in Mexico. The demand function is Qd= 100-50p. The marginal cost of production is c = 0.4.

a) Suppose ConcreteMex is a price taker in the competitive market in Texas. If the market price in Texas is P^c= 0.4, what is ConcreteMex’s supply Q^s and profit in Texas? What is its supply if the price is P^c = 3?

b) In a diagram, illustrate how the marginal cost and average total cost in Texas vary as a function of Q, and how ConcreteMex’s supply in Texas varies with price P^c.

c) If the price in Texas is ?! = 3, what is ConcreteMex’s profit at its optimal supply in part a? Is the profit positive (or equal to zero)? Explain why the firm can earn positive (zero) profit in the competitive market.

Definition Definition Total cost of producing a certain quantity of a good, divided by the quantity produced. It is the sum of all costs (fixed and variable) required to produce one unit of output.

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