Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN: 9781305506381
Author: James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher: Cengage Learning
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Chapter 16, Problem 1.3CE
To determine
To describe: If defendant Lee is feared and then refused to deal with Kay’s K, that can constitute as per violation of the Sherman Act’s that prohibits against anticompetitive practices.
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You are the manager of a monopoly, and your analysts have estimated your demand and cost functionsas P = 300 − 3Q and C(Q) = 2, 000 + 2Q2, respectively.(a) What price-quantity combination maximizes your firm’s profits?(b) Calculate the maximum profits.(c) Is demand elastic, inelastic, or unit elastic at the profit maximizing price-quantity combination?(d) What price-quantity combination maximizes revenue?(e) Calculate the maximum revenues.(f) Is demand elastic, inelastic, or unit elastic at the revenue maximizing price-quantity combination?
Based on the best available econometric estimates, the market elasticity of demand for your firm's product is -2.5. The marginal cost
of producing the product is constant at $200, while average total cost at current production levels is $240.
Determine your optimal per unit price if:
Instructions: Enter your responses rounded to two decimal places.
a. you are a monopolist.
$ 200
b. you compete against one other firm in a Cournot oligopoly.
$
c. you compete against 19 other firms in a Cournot oligopoly.
$ 204.08
Based on the best available econometric estimates, the market elasticity of demand for your firm’s product is -1.5. The marginal cost of producing the product is constant at $125, while average total cost at current production levels is $190.Determine your optimal per unit price if:Instruction: Enter your responses rounded to two decimal places.a. You are a monopolist.$ b. You compete against one other firm in a Cournot oligopoly.$ c. You compete against 19 other firms in a Cournot oligopoly.$
Chapter 16 Solutions
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
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- The market demand, submarket demands (submarket 1 (Qd1); submarket 2 (Qd2)), and total cost functions are below: Qd= 50- 0.5P Qdj=32 - 0.4P1 Qd2=18-0.1P2 TC=50+40Q What is the profit-maximizing price of submarket 1 (P1?) under the third-degree price discrimination? Yanıt:arrow_forwardBased on the best available econometric estimates, the market elasticity of demand for your firm’s product is −2.5. The marginal cost of producing the product is constant at $225, while average total cost at current production levels is $300.Determine your optimal per unit price if:Instructions: Enter your responses rounded to two decimal places.a. you are a monopolist. $ b. you compete against one other firm in a Cournot oligopoly. $ c. you compete against 19 other firms in a Cournot oligopoly. $ Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardSeafood Salt Company wishes to third degree price discriminate to meet competition in two markets A and B. The firm’s total cost schedule is TC = 300 + $2*QA + $2*QB. Demands in the two markets are QA = 120-10*PA and QB = 120 – 20*PB. The profit-maximizing prices to charge in markets A and B are PA = _____ and PB = _____. A. 6; 5. B. 8; 5. C. 7; 4. D. 5; 8. E. None of the above.arrow_forward
- Seafood Salt Company wishes to third degree price discriminate to meet competition in two markets A and B. The firm’s total cost schedule is TC = 300 + $2*QA + $2*QB. Demands in the two markets are QA = 120-10*PA and QB = 120 – 20*PB. The profit-maximizing prices to charge in markets A and B are PA = _____ and PB = __arrow_forwardThe market demand, submarket demands (submarket 1 (Qd1); submarket 2 (Qd2)), and total cost functions are below: Qd= 50- 0.5P Qd =32 - 0.4P Qd;=18-0.1P, TC-50+40Q What is the profit-maximizing price of submarket 1 (P?) under the third-degree price discrimination?arrow_forwardReferring to the data below,choose all the statements that are correct. Profit Compared With Price Pre-tax Profit Indirect Price Discrimination Weekday Weekend Monthly Dollar Percent 54 49 3,815,269 54 54 2$ 3,717,738 2$ (97,531) -2.56% 2$ 2$ (76,985) 2$ 53 53 3,738,284 -2.02% 52 52 2$ 3,736,196 (79,073) -2.07% $ (103,795) $ (151,150) $ (239,598) 51 51 2$ 3,711,474 -2.72% 50 50 3,664,119 -3.96% 49 49 $ 3,575,671 -6.28% If it cannot use indirect price discrimination, the table shows that Universal's profits will be 6.28% lower. The data are not suitable to make statements about indirect price discrimination and profits The prices $54 (weekday) and $49 (weekend) represent indirect price discrimination. There is no indirect price discrimination in rows 2-7 of the table. Without data and analysis outside of the data in this table, one cannot prove that $54 and $49 are the optimal indirect price discrimination prices. According to the table, if it is not allowed to use indirect price…arrow_forward
- If entry restrictions are coupled with rules prohibiting price competition, monopoly-level prices could result even when there are many suppliers of the same service. True Falsearrow_forwardSuppose Ring Dental is the single supplier at HRM region provide the dental service and has a market demand curve Q = 40 – P; A total cost curve given by the formula: T C = 80 - 20Q + 2Q2 Find the profit-maximizing quantity, price, and profit. Now, suppose Halifax Dental wishes to separate the market and target to two different groups of customers young and old customers, the average cost = marginal cost = 10 for both markets Young customers with elasticity = -5 and DA = 12000 - 65P Old customers with elasticity = -7 and DB = 12000 - 55P What is the profit if Halifax Dental sets the equal price for both markets? (use the average elasticity for equal price) What is the profit if Halifax Dental charges different prices for each market?arrow_forward
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