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

Assignmentquestion 1 how is a project baseline used to

Assignment Question 1) How is a project baseline used to guide the execution of the project's work, to evaluate progress and performance, and to control the project? Also, as you continue to think about monitoring and co ...

Given the following chart answer the questions below

Given the following chart answer the questions below, assuming that all resources and technology are fixed for this farm. Corn(bu)    Soybeans(bu) 20,000             0 16,000             5000 12,000             9000 8,00 ...

Assessmentanswer all questions each is worth 15 marks for

ASSESSMENT: Answer all questions, each is worth 1.5 marks. For detailed assessment criteria see the subject guide, which also explains that the assessment looks at the quality of your answers, not the quantity. You can b ...

Topic 1 costs and economies of scaleyou have learned a good

Topic 1: Costs and Economies of Scale You have learned a good deal about production costs and profit in this unit. You have also learned that accountants and economists calculate profit differently. Moreover, many suppli ...

Success and failurethink about the causes of success and

Success and Failure Think about the causes of success and failure for particular movements. What causes some to become widely appealing and have major impacts on change? What causes others (regardless of the validity of ...

Topic 1 price elasticity of demand and government

Topic 1: Price Elasticity of Demand and Government Revenue Based on the assessments of price elasticity of demand, some goods are demand-elastic whereas others are demand inelastic. Our consumption pattern also depends o ...

Question 1 a monopolist has fixed costs fc equal to 250 and

Question 1: A monopolist has fixed costs (FC) equal to $250, and its total costs (TC) are given in Table. The (inverse) demand curve it faces in the market is described by this equation: P = 600 - (11.62)Q. (a) Derive th ...

Based upon your reading of the materials giving and your

Based upon your reading of the materials giving, and your own additional research, prepare an essay discussing the use of infectious disease as a weapon of international terror. You should address the following questions ...

Topic 1 perfectly competitive market structurea perfectly

Topic 1: Perfectly Competitive Market Structure A perfectly competitive market structure has key features. 1. There are many buyers and sellers so neither side of the market has market power. 2. The product provided to t ...

Assignmentprepare a 600-word paper not including title

Assignment Prepare a 600-word paper , not including title page and references on The history and application of Kaizen to Process Improvement. You will research your choice of this topic and work to determine the impact ...

  • 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

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate