Answered: You are the manager of a…

You are the manager of a monopolistically competitive firm, and your demand and cost functions are estimated as Q = 25 – ½P and C = Q² + 2Q + 2. What is the firm's maximum profit? -

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: Since you know all about perfect competition, monopoly, and oligopoly, we can find out how various…

A: An oligopoly is a market structure characterized by a small number of dominant sellers who control a…

Q: Q2. Lab Made Liquid Nitrogen Ice Cream Laboratory is the first company introducing the made-to-order…

A: In economics, the law of demand and the law of supply are two important concepts that explain the…

Q: You are the manager of a monopolistically competitive firm, and your demand and cost…

A: As a Manager of the Monopolistic competitive firm, the demand function is given asQ = 36 – 4PCost…

Q: There are two firms in a homogenous product market described by the demand function…

A: Initial calculation The quantity produced by firm1=q1 The quantity produced by firm2=q2 the inverse…

Q: Assume that Apple is currently earning short-run economic profits On a correctly labeled diagram,…

A: Monopolistic competition is a form of market where many firms are offering competing products and…

Q: Is the statement Price is equal to average total cost true for a monopolistically competitive firm…

A: There are large number of firms in both perfect competition and monopolistic competition.

Q: with a Demand function p = 169 - 2Q. All three firms have identical Cost functions: TC = 1200 - 95q…

A: *Answer: There are three firms operating in a market with a Demand function p= = 169-2Q [where, Q =…

Q: Consider a duopoly market with volume competition. The demand is given by P = 120-Q. P is the price…

A: In order to find the quantity produced by company 1, we just need to find the level of Q1 that…

Q: Lucia owns a plot of land in the desert that isn't worth much. One day, a giant meteorite falls on…

A: Given:- Lucia marginal cost=0 Lucia charges price=$4 No. of market=2 i.e Market A and Market B…

Q: The following graph shows the marginal cost (MC) and average total cost (ATC) and the initial demand…

A: Perfect competition is a type of market where there are very large number of firms,which have no…

Q: Gary's Gas and Frank's Fuel are the only two providers of gasoline in their town. Below is the…

A: The profit maximizing condition is Marginal revenue=Marginal Cost that is MR=MC. Total…

Q: Alpha and Gamma are the only two phone handset manufacturers in the world. Each firm has a cost…

A: An oligopoly market is one that has few large firms which are interdependent selling homogenous as…

Q: QUESTION 4: The graph below shows the demand and costs data for a one of firms operating in a market…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: Suppose the total monthly demand for golf services is Q = 20 − P. The marginal cost to the firm of…

A: The demand function is given as Q=20-P and the MC (marginal cost) is $1. By equating MC=P; Thus, in…

Q: (1/800)(P-V)), where S is industry output, n number of firms, P price of this firm, and V average…

A: Monopolistic competition is a form of market where large numbers of firm exist but produce…

Q: 7. Two firms are competing in a market where the model of competition is Cournot. The inverse demand…

A: In Cournot duopoly, each firm competes in quantity and maximize profit by producing output where…

Q: Suppose there are just two firms, 1 and 2, in the oil market and the inverse demand for oil is given…

A: A) Suppose there are just two firms, 1 and 2, in the oil market and the inverse demand for oil is…

Q: You are the manager of a monopolistically competitive firm, and your demand and cost functions are…

A: The inverse demand function views price as a function of quantity. The profit maximizing output…

Q: Gamma and Zeta are the only two widget manufacturers in the world. Each firm has a cost function…

A: Total revenue determines the amount earned from the quantity produced.Economic costs involve not…

Q: Many home improvement retailers like Home Depot and Lowe’s have low-price guarantee policies. At a…

A: According to the trend, the promise to meet the lowest price offered by the competitors will leads…

Q: Consider the weekly market for gyros in a pepular neighborhood close to campus. Suppose this market…

A: The competitive market experiences a number of buyers and sellers. None of these buyers or sellers…

Q: 7. 2 firms are engaged in Bertrand competition. They each face the following cost curve C(Q) =…

A: Bertrand equilibrium refers to the equilibrium where the price is equal to marginal cost. It means…

Q: (Multi-Variable Unconstrained Optimization - pete in a market with inverse demand given by p = 10 -…

A: Inverse demand function: P = 10-2q1-2q2 Firm 1 marginal cost = 2q1 Firm 2 marginal cost = 4q2

Q: irm’s market power: an explanation for a firm’s pricing behavior. The economists contribute an…

A: Disclaimer: Since you have asked multipart questions, we will solve the first three questions for…

Q: 3. Crusty's is a pizzeria with the following cost structure: its total fixed cost is $1200 per day,…

A: Monopolistically competitive market refers to the market where close substitute products are…

Q: Q3: Q2: Firms A and B are two firms supplying products in two separate differentiated goods markets.…

A: Cost of Production: Cost of production refers to the total economic cost incurred by a firm to…

Q: Mylan continues to charge $150 per EpiPen, Mylan will earn economic profit. rue or False: Given the…

A: The difference between the accounting cost and the opportunity cost is termed as the economic…

Q: Suppose Barefeet is a monopolist that produces and sells Ooh boots, an amazingly trendy brand with…

A: Profit maximizing output for a monopolistic competitive firm is where MR=MC; In this case, the +…

Q: Q2. Lab Made Liquid Nitrogen Ice Cream Laboratory is the first company introducing the made-to-order…

A: In economics, the law of demand and the law of supply are two important concepts that explain the…

Q: Q2. Lab Made Liquid Nitrogen Ice Cream Laboratory is the first company introducing the made-to-order…

A: Please find the images attached for detailed explanation

Q: Suppose that one of the food trucks decides to break the agreement and produce 60 meals per day.…

A: (Note: Since there are multiple parts, only the first three parts of the first question has been…

Q: Market A Market B 20 20 18 18 18 18 14 14 Slope: -0.67 12 12 10 10 Slope: -0.67 4 4 2 MR MR. O 3 0 0…

A: We are going to use Microeconomics concepts such as price discrimination and profit maximisation…

Q: EXERCISE 191.1 (Stackelberg's duopoly game with fixed costs) Suppose that the inverse demand…

A: Given, Cost function, Ci(qi)=0, if qi=0f+cqi, if qi>0.…

Q: Here is a market with three firms: 1, 2, and 3. The demand curve is P=100-Q. There is no fixed cost…

A: The demand curve is a graphical representation of the relationship between a good's or service's…

Q: an Problem 5. Consider following price competition between 2 firms. Both firms choose their prices…

A: In game theory, a Nash equilibrium is a situation in a non-cooperative game in which no player has…

Q: YOU WILL USE THIS INFO FOR THIS QUESTION AND THE NEXT TWO QUESTIONS. Your firm operates in a…

A: The demand for the product is given as It is assumed that the average total cost equals the marginal…

Q: Exercise 2.9. Consider an industry where there are two firms, a large firm, Firm 1, and a small…

A: a) An extensive-form game is a mathematical representation of a strategic interaction between…

Q: A The market is monopolistically competitive and at its long run equilibrium B The market is a…

A: When marginal revenue lies below the demand curve, it implies that the seller has to lower the price…

Q: The Canadian retail market for roasted whole coffee beans is dominated by two firms: Tim Hortons (T)…

A: An oligopoly market is characterized by a small number of firms dominating the market. A duopoly is…

Q: 2. Two webpages offer the same service. The inverse demand for the service is q = 10 – p. Their cost…

A: Marginal costs of firms are MC1 =1 and MC2 = 4. In Bertrand price setting competition, marginal cost…

Q: Q3. There are two firms selling differentiated products. Firm A faces the following demand for his…

Q: & The market demand is Q(P) = 10 - P, there are N+1 firms, one firm, referred to as "Firm 1" has…

A: The total quantity desired for a given good by all consumers in a market is known as market demand.

Q: As a manager of a chaln of movle theaters that are monopolies in their respective markets, you have…

A: Price discrimination is a selling technique that charges clients various prices for a similar item…

Q: Cho owns a plot of land in the desert that isn’t worth much. One day, a giant meteor falls on her…

A: If Cho decides to set a different price for different markets, to generate maximum revenue; then, he…

Q: If Mylan continues to charge $150 per EpiPen, Mylan will earn True or False: Given the demand curve…

A: Substitute goods are the alternative options that are presented to the consumers, which yield…

Question

You are the manager of a monopolistically competitive firm, and your demand and cost functions
are estimated as Q = 25 - P and C = Q² +2Q + 2. What is the firm's maximum profit?

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: Define monopolistic competitive market

VIEW

Step 2: Find profit

VIEW

Solution

VIEW

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

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

Hand written solutions are strictly prohibited
2
There are two ice-cream parols on a beach. The dayly demand for ice-creams is given by Q = 3252 - 7p. The average variable cost of an ice-cream is 83 while the rent of the place is 576. How many ice-creams is one company selling if the two ice-cream stands operate as Cournot duopolists? (Please use 2 decimals in your answer.)
Pick the correct answer and explain in steps
Le Jouet is a French firm, and it is the only seller of toy trains in France and Russia. Suppose that when the price of toy trains increases, Russian children more readily replace them with toy airplanes than French children. Thus, the demand for toy trains in Russia is more elastic than in France. The following graphs show the demand curves for toy trains in France (Dr) and Russia (DR) and marginal revenue curves in France (MRF) and Russia (MRR). Le Jouet's marginal cost of production (MC), depicted as the grey horizontal line in both graphs, is $12, and the resale of toy trains from Russia to France is prohibited. Assume there are no fixed costs in production, so marginal cost equals average total cost (ATC). PRICE (Dollars per toy train) 40 36 32 28 Total 24 20 16 12 8 4 0 Country France Russia France MR Price (Dollars per toy train) 20 20 2 4 6 8 10 12 14 16 18 20 QUANTITY (Millions of toy trains) N/A O True MC-ATC OF O False N/A (?) Single Price Quantity Sold (Millions of toy…
A shoe store in a monopolistically competitive market has a demand curve for their shoes given by P = 81-0.5Q. The variable costs of producing a shoe are given by the equation VC = Q2 + 3Q and so the marginal costs are MC = 20 +3. a) What is the shoe store's profit - maximizing output and price? If the shoe store is in a long-run equilibrium, what must its fixed costs be?
a) Suppose that the two firms engage in Cournot competition. Find the equilibrium price PNE in the industry, the equilibrium outputs QANE and QBNE, as well as the profits πANE and πBNE, for each firm. b) Suppose the marginal cost for firm B increases from $20 to $140, while everything else remains unchanged. Find the new equilibrium price PNE in the industry, the new equilibrium outputs QANE and QBNE, as well as the new profits πANE and πBNE for each firm. c) Suppose that, in addition to the marginal cost increase from $20 to $140 from sub question b), firm B also has a fixed cost of $2500, out of which $2100 may be recouped if it shuts down; everything else remains unchanged. In this case, what will firm B’s optimal output be? (Justify your answer.) What will firm A’s profit be?
There are two ice-cream parols on a beach. The dayly demand for ice-creams is given by Q = 3079 - 3p. The average variable cost of an ice-cream is 70, while the rent of the place is 966. How many ice-creams is the 'Leader' company selling if the two ice-cream stands operate as Stackelberg duopolists? (Please use 2 decimals in your answer.)
Suppose that firm Alphabet is the only company that sells all-inclusive vacation packages in the UK. It faces two markets with demand curves given by P₁ = 200 - Q₁ and P₂ = 100-Q2. Assume that Alphabet's total cost function is C = 400 + 200 1) What is the market structure of the all-inclusive vacation packages in the UK? Is firm Alphabet a price taker or price maker? Explain. 2) If Alphabet can price discriminate and could tell which consumer belongs to which market before the purchase happens, what is the type of price discrimination that Alphabet is practising? Explain. Give another example of the same type of price discrimination. 3) If Alphabet can charge different prices at those two markets, what price should it charge in each market in order to maximise profits? What are the quantities it should produce in each market? 4) What if he cannot price discriminate? Then what price should he charge? What is the quantity produced?
!
There are only two driveway paving companies in a small town, Asphalt, Inc. and Blacktop Bros. The inverse demand curve for paving services is ?= 2040 ―20? where quantity is measured in pave jobs per month and price is measured in dollars per job. Assume Asphalt, Inc. has a marginal cost of $100 per driveway and Blacktop Bros. has a marginal cost of $150. Answer the following questions: Determine each firm’s reaction curve and graph it. How many paving jobs will each firm produce in Cournot equilibrium? What will the market price of a pave job be? How much profit does each firm earn?
!