There is a monopolist, Concrete Mex, in the concrete market in Mexico. The demand function is Qd= 100-50p. The marginal cost of production is c = 0.4. a) Suppose ConcreteMex is a price taker in the competitive market in Texas. If the market price in Texas is Pc= 0.4, what is ConcreteMex’s supply Qs and profit in Texas? What is its supply if the price is Pc = 3? b) In a diagram, illustrate how the marginal cost and average total cost in Texas vary as a function of Q, and how ConcreteMex’s supply in Texas varies with price Pc. c) If the price in Texas is ?! = 3, what is ConcreteMex’s profit at its optimal supply in part a? Is the profit positive (or equal to zero)? Explain why the firm can earn positive (zero) profit in the competitive market.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

There is a monopolist, Concrete Mex, in the concrete market in Mexico. The demand function is Qd= 100-50p. The marginal cost of production is c = 0.4.

a) Suppose ConcreteMex is a price taker in the competitive market in Texas. If the market price in Texas is Pc= 0.4, what is ConcreteMex’s supply Qs and profit in Texas? What is its supply if the price is Pc = 3?

b) In a diagram, illustrate how the marginal cost and average total cost in Texas vary as a function of Q, and how ConcreteMex’s supply in Texas varies with price Pc.

c) If the price in Texas is ?! = 3, what is ConcreteMex’s profit at its optimal supply in part a? Is the profit positive (or equal to zero)? Explain why the firm can earn positive (zero) profit in the competitive market.

 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 1 images

Blurred answer
Similar questions
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education