Ask Question, Ask an Expert


Ask Microeconomics Expert


A firm with market power has estimated the subsequent demand function for its product:

Q = 12,000 – 4,000 P

Where P = price per unit and Q = quantity demanded per year.

The firm’s total costs are $4,000 when nothing is being produced. These costs raise by 50 cents for each unit produced.                       

a) prepare an equation for the firm’s total cost function

b) prepare an equation for the firm’s marginal cost function

c) prepare an equation for firm’s total revenue function (in terms of Q)

d) prepare an equation for the firm’s marginal revenue function (in terms of Q)

e) Assume the firm’s goal is to maximize profit, and determine

• The quantity of output it should produce

• The price it must charge

• The annual profit it will make

f) Given the price find outd in (e), what is the markup over AVC?

g) Compute the price elasticity of demand at the price-quantity combination determined in part (e), and uses it to determine the profit-maximizing markup. Compare with the markup find outd in (f). Do you find the result of the comparison surprising? Why or why not?

h) Elucidate whether the firm will make economic profit

• In the short run

• In the long run.

When answering the economic profit problem, clearly specify your assumptions and demonstrate with a diagram.


A monopoly firm faces a demand curve P = 120 – Q. The monopolist’s marginal cost curve (MC) is constant at MC = $4.

a) Determine the non-discriminating monopolist’s profit-maximizing quantity and price
(Recall that the MR curves has the same intercept as the demand curve, but twice slopes).

b) Now suppose the monopolist practices first-degree (perfect) price discrimination, that is, is capable to charge a different price to each customer. What is the quantity sold under this policy? What is the price charged for the last unit just sold?

c) Which of two pricing strategies (single price vs. perfect price discrimination) results in greater social welfare (measured by the sum of the consumer and producer surplus)?

d) Which of two pricing strategies results in greater consumer surplus?

e) How does the choice of pricing strategy affect allocate efficiency in economy?

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91586

Have any Question? 

Related Questions in Microeconomics

Question 1which of the following levels of supply chain

Question 1 Which of the following levels of supply chain information systems is most likely to provide the firm with a competitive advantage? A.Strategic planning B.Decision analysis C.Management control D.Transaction sy ...

Asignment 11 given the production function asy 68 135x1

Assignment 1 1. Given the production function as: y = 6.8 + 1.35x 1 + 7.7x 2 - 8.5x 3 + 0.4x 4 - 0.06x 1 2 - 1.25x 2 2 + 0.2x 1 x 2 and assuming x 3 = 0.32 and x 4 = 4.25 i. Form production function in iso-quant set. ii. ...

Assignmentteamworkhow does effective teamwork look how is

Assignment Teamwork How does effective teamwork look? How is teamwork displayed in your life as it relates to your current role? Why is teamwork a necessity for organizations? Does this help or hurt an organization if te ...

Assignment production cost analysis and estimation applied

Assignment: Production Cost Analysis and Estimation Applied Problems Please complete the following two applied problems: Problem 1: William is the owner of a small pizza shop and is thinking of increasing products and lo ...

Assignment land restoration proposalpart 1please see

Assignment: Land Restoration Proposal Part 1 Please see attachment for part 1 and only complete highlighted section for this assignment. Your team has been given the land rights to a 100-acre abandoned parcel of land. Th ...

Intermediate microeconomics assignmentexercise 1 -

INTERMEDIATE MICROECONOMICS ASSIGNMENT Exercise 1 - Capturing surplus using a block pricing Consider a monopolist facing a linear demand p(q) = 20 - q, and marginal cost MC = 2. a) If the monopolist charges the same pric ...

Great depression economy paperwritten assignmentplease

Great depression , economy paper Written Assignment Please provide a comprehensive answer to the following two questions: 1) Which were the main causes of the Great Depression? 2) Why did the Great Depression last so lon ...

1 the crr model european claimconsider the crr model of

1. The CRR model: European claim. Consider the CRR model of stock price S with T periods and parameters d (a) Consider the European claim X with expiry date T and the payoff X = g(S r ) = 1/S T 1[k,∞)(S T ). Show that th ...

Question 1the document that lists and details the contents

Question 1 The document that lists and details the contents and conditions of a shipment is called: A. The Tariff B. Proof of Delivery C. The Invoice D. The Bill of Lading Question 2 Declining transport rates as the quan ...

Microeconomicsdiscussion forumnote the video has closed

Microeconomics DISCUSSION Forum Note: The video has Closed Captioning. To activate it, start the video, mouse over the bottom of the video and click on the CC icon, then select from the menu. Note: The video has Closed C ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro