MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
9th Edition
ISBN: 2810022149537
Author: Baye
Publisher: MCG
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Chapter 14, Problem 23PAA
To determine
To know:Whether policy increases social welfare or not.
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Robert’s New Way Vacuum Cleaner Company is a newly started small business that produces vacuum cleaners and belongs to a monopolistically competitive market. Its demand curve for the product is expressed as Q = 5000 – 25P where Q is the number of vacuum cleaners per year and P is in dollars. Cost estimation processes have determined that the firm’s cost function is represented by TC = 1500 + 20Q + 0.02Q2. Show all of your calculations and processes. Describe your answer for each question in complete sentences, whenever it is necessary.
What are the profit-maximizing price and output levels? Explain them and calculate algebraically for equilibrium P (price) and Q (output). Then, plot the MC (marginal cost), D (demand), and MR (marginal revenue) curves graphically and illustrate the equilibrium point.
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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=1,265−9Q�=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
.
Dalahla Company Limited, focusing on producing tooth paste (n units) has a demand function
4Q = 35 – 0.5P. If total fixed cost is GH¢80 and average variable cost per unit function is 3Q –
51 +
e, where Q is number of tooth paste produced and P is the price per tooth paste (in GH¢).
What is the total profit at the profit maximizing level of output, and what is the best pricing policy
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320
Chapter 14 Solutions
MANAGERIAL/ECON+BUS/STR CONNECT ACCESS
Ch. 14 - Prob. 1CACQCh. 14 - Prob. 2CACQCh. 14 - Prob. 3CACQCh. 14 - Prob. 4CACQCh. 14 - Prob. 5CACQCh. 14 - Prob. 6CACQCh. 14 - Prob. 7CACQCh. 14 - Prob. 8CACQCh. 14 - Prob. 9CACQCh. 14 - Prob. 10CACQ
Ch. 14 - Prob. 11PAACh. 14 - Prob. 12PAACh. 14 - Prob. 13PAACh. 14 - Prob. 14PAACh. 14 - Prob. 15PAACh. 14 - Section 16(a) of the Securities and Exchange Act...Ch. 14 - Prob. 17PAACh. 14 - Prob. 18PAACh. 14 - Prob. 19PAACh. 14 - Prob. 20PAACh. 14 - Prob. 21PAACh. 14 - Prob. 22PAACh. 14 - Prob. 23PAA
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