Assume the demand for a new drug Alwayssmile is given for the first 2 years by Year 1: Q1-1600-2P1 Year 2: Q2=2Q1-4P2 Given the linear demand function, we know that the profit would be given by setting the Marginal revenue which has the same intercept as the demand and twice its slope = marginal cost Assume that the cost of producing Alwayssmile is approximately =0, Find the profit-maximizing price for the second year: P2

Assume the industrial conditions of red pepper production in the market for homogeneous products there are many manufacturers where each manufacturer has a market share (market share) the same, relatively small and can not affect the price of the change strategies carried out by these manufacturers in the market. If it is known that the function the demand is Q = 2000-P, and the total cost of each manufacturer is the same that is, TCi = 100 + 5q2i. Where Q = [2]I qi, where i is the producer of i and i is 1, 2, 3,..., n. Questions: - What is the number of companies in the long term of the competitive marketi perfect for this homogeneous product, where every company has the same market share? - What is the selling price of thi product in market? - Calculate the Herfindahl-Hirschman Index (HHI) of the red pepper producer industry here!

1

Given that MR = P"(1 + 1/Ep) = p*((Ep+1)/Ep) where Ep is the price elasticity of demand, if marginal cost is constant at $20 over the range of current potential production and the price elasticity of demand = -2.0, then the profit maximizing price to charge is: $35 $45 $30 $40