(Answered) Your consulting firm was just granted an exclusive contract

Economics

Your consulting firm was just granted an exclusive contract for your state. You now must decide your pricing policy, given the following relationships:

P = $1400 - 0.0004Q

MR = $1400 - 0.0008Q

AVC = $1000

Where P is the price, Q the quantity, and AVC the average variable cost.

The firm will encounter no fixed costs, and all revenue is after taxes. As your firm has been granted an exclusive contract, your pricing and output decisions will be those of a monopolist.

Tasks:

Using the data above, calculate the output the firm will provide.
Determine the price at this output level.
Complete the Microsoft Excel Template given below using the data in the problem.
Check whether your data is consistent with your calculations in question 1. Why or why not?
Now assume that the state decides to give as many contracts as it can for the same activity, so your firm is now operating in a perfectly competitive market. How will your price and output decisions change? Explain the differences and why these changes happened.

View complete question

Microeconomics, Economics

Category:- Microeconomics
Reference No.:- M91388551
Price:- $50

Verified Expert

Priced at $100 Now at $50, Verified Solution

Have any Question?Write your Review or question?

Related Questions in Microeconomics

Question at the wto ministerial conference held in seattle

Question: At the WTO Ministerial Conference held in Seattle in December of 1999, protesters campaigning for many causes took to the streets and eventually faced tear gas and rubber bullets from the police. Read the WTO P ...

Question suppose two countries portugal and spain each

Question: Suppose two countries, Portugal and Spain, each produce flowers and clocks. Assume that land is an input specific to flowers and capital is an input specific to clocks. Labor is free to move between the two ind ...

Question econommic question please help1 describe the

Question: Econommic question, please help 1. Describe the evolution of the concept of international development and discuss the critiques against 'development'--or specifically modernization theory--from a dependency per ...

Question the cost of maintaining a new care is estimated at

Question: The cost of maintaining a new care is estimated at $295 the first year and to increase by $50 each year thereafter. How much should be set aside for maintenance, if the car is to be kept 10 years and if the mon ...

Assignment consider a team that you have been a member of

Assignment: Consider a team that you have been a member of. This can be a work team, sports team, school team etc. Explain the purpose of the team, the group task functions, the individual task functions, and if the team ...

Question many retirement funds charge an administrative fee

Question: Many retirement funds charge an administrative fee each year equal to 0.25% on managed assets. Suppose that Alexx and Spenser each invest $5,000 in the same stock this year. Alexx invests directly and earns 5% ...

Question your company is intending to launch a new product

Question: Your company is intending to launch a new product, and your line manager is worried that the product will not "cross the chasm" and he has asked you to prepare a presentation regarding the product adoption life ...

Question in the case of a binding price ceiling why is the

Question: In the case of a binding price ceiling, why is the price below the equilibrium price? Isn't it possible for suppliers to increase price (to hit the demand curve) at the quantity traded without losing consumers? ...

Question one way to identify a related choice is by

Question: One way to identify a related choice is by examining a firm's outputs. A firm's diversification choice becomes more related as outputs become more similar. However, will a firm that realizes scope economies fro ...

Question people with non-mainstream sexual preferences are

Question: People with non-mainstream sexual preferences are a larger percentage of the population of large cities than small towns. Is this because cities encourage deviant behavior or might there be an economic explanat ...

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

Recent Questions

Ask Microeconomics Expert