A manufacturer faces the demand function, 20Q + 5P = 120 (where Q is quantity and P is price), and has the marginal cost function, MC = 1+0.8Q. If the manufacturer maximises revenue instead of profit, how will this affect consumer surplus?

A manufacturer faces the demand function, 20Q + 5P = 120 (where Q is quantity and P is price), and has the marginal cost function, MC = 1+0.8Q. If the manufacturer maximises revenue instead of profit, how will this affect consumer surplus?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Given the (inverse) demand function P = 337 - 19Q, at which value of Q is revenue maximized? Q = 9 Q…

A: Revenue is the product of price and quantity.Revenue = PQ

Q: Inverse demand functions are PA = 10 - QA and PB = 5 - 0.5QB. Under a two part tariff, fixed fee…

A: Given information Pa=10-Qa Pb=5-0.5Qb

Q: 2. Suppose the demand and marginal cost at a local golf course is given by: P = 200 - 4Q MC = $8.…

A: In two part tariff, good is sold at a per unit price equal to marginal cost along with an access fee…

Q: You have been selected to talk to a group of people about elasticity. While your audience…

A: The price elasticity of demand shows the responsiveness of change in quantity demand when the price…

Q: The demand function for a particular product is given by…

A: Here, a particular demand function is given as: D(x)=0.5x2+3x+190 To find: marginal revenue at the…

Q: Consider product Y with industry supply given by p = 40 + q and industry demand given by p = 20 -…

A: Demand curve is the downward sloping curve. Supply curve is the upward sloping curve. Equilibrium…

Q: Show that if demand is elastic (say, E = −2), marginal revenue is positive but less than price. Show…

Q: The individual demand for a slice of pizza at Sam's Pizza is given by QD = 6 – P. Assume the…

A: Sam's pizza profit will calculated by reducing the revenue from the cost so here we calculate the…

Q: 4.3 Suppose the supply function for tea is q = -1+2p, where p denotes price and q denotes quantity…

A: Supply function for tea is; q=-1+2p Where; p= Price of tea…

Q: The demand function can be expressed algebraically as: P = 200 – 0.ĄQ when 0 50 Calculate the…

A: We’ve been given inverse demand functions and the total cost function for Chillman. With the use of…

Q: Demand P (q)=500-2q Total Costs C(q)=10+20q . what is marginal cost marginal revenue of this demand…

A: Marginal cost is a cost that arises when firms produce one more unit and is calculated by…

Q: Suppose in the market for tickets, Demand is given by Qd=100,000-100P. Suppose producers can…

A: The consumer surplus is the difference between what they are willing to pay and what they actually…

Q: (A) Consider the market for Gym clothes, here's the supply function QS = 11 + 3Pg + OPo and the…

A: Demand function: QD = -4Pg+4Po Supply function: QS = 11+3Pg+0Po Pg = Price of gym cloths Po = Price…

Q: Consider the market represented by the figure to the right. Suppose this market has one firm. If the…

A: In a monopoly, there is a single seller producing unique product. Marginal revenue lies below the…

Q: Show that if demand is elastic (say, E = -2), marginal revenue is positive but less than price. Show…

A: The marginal revenue refers to the additional total revenue that a seller earns by selling an…

Q: Qd=88 000-200P+ 0.3M-1000PR MC 90 +0.09Q TVC = 48Q TFC = 650 000 where Quis quantity demanded, P is…

Q: Suppose a firm lowers its price to $10, raising the quantity sold from 4 to 5 units. If the marginal…

A: Marginal revenue is the additional revenue earned from producing an additional output. It can be…

Q: You own a private parking lot near shard building with a capacity of 600 cars. The demand for…

A: On a daily level, operating costs are linked with the upkeep and administration of a business.…

Q: The market demand function is represented by P = 10,070 -2Q. In this market demand function, Pand Q…

A: Monopoly is a market structure in which there is only one seller in the market selling a unique…

Q: Given a firm’s market demand curve as: P = -2.5Q + 300, where Q is quantity of the firm’s output…

A: Total revenue is the revenue earned from sale of output. Marginal revenue is the additional revenue…

Q: Total revenue from the sale of X is given by the equation R=100Q-2Q2. Calculate the value of…

A: Total revenue is the amount of money earned from total quantity sold. Marginal revenue is the…

Q: A firm has an inverse demand curve of P = 30 - 3Q and a marginal cost curve MC= 6Q. Calculate the…

A: producer equilibrium is the situation where firm makes maximum profit. At maximum profit point or…

Q: Firm A: quantity=335000=firm B P(A)=P(B)=$2567, maximum price=$4000 firm C Q(C)=6,495,000,…

A: Consumer surplus is the area which are lie below the demand curve and above the price level with…

Q: What is the value of producer surplus? What is the value of deadweight loss? Assume that the firm…

A: Monopoly firm refers to the single firm in the market. There is no difference between industry and…

Q: profit maximizing price and the rate of output

A: Profit is the amount of total revenue which a producer or seller gets after deducting all the costs.…

Q: Firm A sells good X. It faces demand q = 80 - P, where P is the price of X. Firm A's cost function…

A: A demand function expresses the relationship between quantity demanded of a good and its price. The…

Q: In a monopoly market, you have an inverse demand function P=a-bQ, where Q is total market production…

A: Monopoly Market: A monopoly market refers to a market structure in which a single firm has exclusive…

Q: Economic Total revenue from the sale of X is given by the equation R=100Q-2Q2. Calculate the value…

A: Answer: Given, Total revenue function: R=100Q-2Q2 Marginal revenue=20 Calculation:…

Q: Suppose that a price-searcher firm was going to use a first degree price discrimination strategy.…

A: The additional expense required by manufacturing one more unit of an item or service is known as the…

Q: Assume that you are an economic consultant. The firm that hired you has provided the information…

A: In perfect competition, There exists a large no. of buyers and sellers. The firm maximize it's…

Q: Demand for microprocessors is given by P = 35 – 5Q , where Q is the quantity of microchips (in…

A: In a perfectly competitive market, the profit-maximizing condition is known as the point where…

Q: Consider a market (aggregate) inverse demand function: p = 20 – 2 q. Find the market price where the…

A: Demand is the function of various determinants but as per law of demand only price is the factors…

Q: The movie distributor charges a movie theatre $4 per ticket to rent a movie. Suppose the theatre can…

A: a. Profit-Maximizing Price and QuantityAfternoon Show:Price: $7Tickets Sold: 30Evening Show:Price:…

Q: There are 1000 pear producers that have identical cost functions, C= 200+0.025q2 where q is the…

A: The structure of a market where there are a large number of buyers and sellers selling homogenous…

Q: A sand and gravel company sells pea gravel. It faces two types of customers with the following…

A: Given: Type A: P=3.5-0.002Q Type B: P=3-0.001Q Marginal Cost=$0.50 per bag

Concept explainers

Product and Price Bundling

Product and price bundling is used as a marketing strategy by businesses, where complementary products and services are combined and sold as a package deal. This bundled price is usually less than the total price of the individual products if they were to be sold separately. When bundled and sold, each product is sold at a reduced price. Using a price bundling strategy helps increase the average revenue per user and also increases the engagement with the user. This happens as the perceived value of the bundled products is more than the individual products.

Question

A manufacturer faces the demand function, 20Q + 5P = 120 (where Q is quantity and P
is price), and has the marginal cost function, MC = 1+ 0.8Q. If the manufacturer
maximises revenue instead of profit, how will this affect consumer surplus?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Explanation

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

Follow-up Questions

Read through expert solutions to related follow-up questions below.

Follow-up Question

where are the prices they have to pay in each?

Solution

by Bartleby Expert

SEE SOLUTION

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

A toy manufacturing from has demand for the product is given by the demand function Q= 500 - 3p. Where P is the price in dollars and q is the quantity sold per year. To sell 200 units, what price should the firm charge.
QUESTION 1 Find the marginal revenue expression of Q, when the demand function is the following: a) P = 50 – 5Q1 V100 – 201 125 – 5Q1 – Q2 - 0.05Y b) P = c) P = Given the demand function P = 1000 – 10Q2 calculate the following Elasticities. 5 to Q = 6 d) The arc elasticity from Q e) The Point Elasticity at Q = 5 and Q = 6 f) Find the value for Q where there is unit Elasticity
The Spacing Guild has a monopoly on space transport. They sell tickets (Q) for seats on starships for interstellar travel at a per-ticket price of P. All tickets cost the same. The Marginal Cost for each seat is $19 and there is a fixed cost of $5,610. Market demand is Q=462-2P. If the government imposes a price ceiling of $33, what is the Guild's PROFITS in the SHORT-run? Enter a number only, drop the $ sign.
Suppose you own fast food takeaway shops, one in Glebe, with lots of competition, and one in Tibooburra, with little competition. In Glebe, the price elasticity of demand is -2.5, while in Tibooburra, it is -2.0. Assume the marginal cost of providing a combo burger is $10. What are the optimal prices of a combo burger in each location?
The Spacing Guild has a monopoly on space transport. They sell tickets(Q) for seats on starships for interstellar travel at a per-ticket price of P. Alltickets cost the same. The Marginal Cost for each seat is $14 and there are no other costs.Market demand is Q=315-2P. What is the absolute value of the elasticity of demand at the point wherethe Guild produces?
American Girl doll has an inverse demand curve of P- 150 0.25Q, where Q measures the quantity of dolls per day and P is the price per doll. The marginal cost is given by MC 10+0.50Q. What is the total surplus at the profit -maximizing output level? 1)$12,250Correct2) $144,0003)$18,1204)$4,500
given the demand function Pd=25-Q2and supply function Ps = 2Q+1. Assuming pure competition, find the consumer and producer surplus.
Consider a competitive industry with a perfectly elastic supply curve given by p = 20. The demand curve facing this industry is p(q) = 60-q. Find the per-unit tax that will maximize tax revenue to the government.
Q1. Given cost function f(x) = 1/2(c)(x2), where c>0, and demand curve y(z) = z-a, where a > 1 a). Compute price elasticity of demand. b). Draw a diagram showing marginal cost and marginal revenue c). Find price and output that maximize profits d). Find the markup (price divided by marginal cost). Does it increase or decrease based on elasticity of demand?