Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
9th Edition
ISBN: 9781259290619
Author: Michael Baye, Jeff Prince
Publisher: McGraw-Hill Education
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Question
Chapter 8, Problem 5CACQ
(A)
To determine
The short run supply function if it operates in a
(B)
To determine
The short run supply curve if it operates in a
(C)
To determine
The short run supply curve if firm operates in a
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You are the manager of a firm that produces a product according to the cost function
C(qi) = 160 + 58qi – 6qi2 + qi3. Determine the short-run supply function if:
You operate a perfectly competitive business.
You operate a monopoly.
You operate a monopolistically competitive business.
You are the manager of a monopolistically competitive firm, and your demand and cost functions are given by Q= 36 - 4P and C(Q)=4+4Q+Q^2.
Find the inverse demand function for your firm’s product.
Determine the profit-maximizing price and level of production.
Calculate your firm’s maximum profits.
What long-run adjustments should you expect? Explain.
What is the value of the consumer surplus (under monopoly)?
Calculate the deadweight loss (under monopoly).
What is the value of the Lerner Index? Explain what this number means.
Suppose you are the manager of a monopolistically competitive firm, and your demand and cost functions are given by Q = 36 − 4P and C(Q) = 4 + 4Q + Q2
Find the inverse demand function for your firm’s product.
Determine the profit-maximizing price and level of production.
Calculate your firm’s maximum profits.
Chapter 8 Solutions
Managerial Economics & Business Strategy (Mcgraw-hill Series Economics)
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Similar questions
- You are the manager of a monopolistically competitive firm. The present demand curve you face is P = 100 – 4Q. Your cost function is C(Q) = 50 + 8.5Q2. What level of output should you choose to maximize profits? What price should you charge? What will happen in your market in the long run? Explain.arrow_forwardConsider a monopolistically competitive firm that faces demand curve P=160-3Q and total cost curve TC=100+Q². If this firm is profit-maximizing, what is the value of the average total cost (ATC) evaluated at Q*? (note: I am not asking for total costs. It's the value you would mark on your graph when you plug Q* into the ATC curve).arrow_forwardYou are the manager of a monopolistically competitive firm, and your demand and cost functions are given by Q = 36 – 4P and C(Q) = 124 – 16Q + Q2. [NOTE: MC(Q) = -16+2Q] Calculate your firm’s profits level.arrow_forward
- You are the manager of a firm that produces a product according to the cost function C(qi) = 210 +62q; – 8q? + q? . Determine the short-run supply function if: a) You operate a perfectly competitive business. b) You operate a monopoly. c) You operate a monopolistically competitive business.arrow_forwardYou are the manager of a monopolistically competitive firm, and your demand and cost functions are given by Q= 36 - 4P and C(Q)=4+4Q+Q^2. What long-run adjustments should you expect? Explain. What is the value of the consumer surplus (under monopoly)? Calculate the deadweight loss (under monopoly). What is the value of the Lerner Index? Explain what this number means.arrow_forwardSuppose a company creates its own differentiated type of sneaker and is thus considered a monopolistically competitive firm. This firm has a constant marginal cost curve. For each unit of output that the monopolistically competitive firm produces, it costs an additional $50$50. The firm's marginal revenue curve is MR=80−6QMR=80−6Q, where Q is the quantity produced. The firm's perceived demand curve is P=80−3QP=80−3Q. What is the monopolistically competitive firm's profit-maximizing output and price? Write the exact answer. Do not round.arrow_forward
- Assume a firm engaging in selling its product and promotional activities in monopolistic competition face short-run demand and cost functions as Q = 20-0.5P and TC= 4Q2 -8Q+15, respectively. Having this information a) Determine the optimal level of output and price in the short run. b) Calculate the economic profit (loss) the firm will obtain (incur). c) Show the economic profit (loss) of the firm in a graphic representation.arrow_forwardYou are the manager of a monopolistically competitive firm, and your demand and cost functions are given by Q = 36 – 4P and C(Q) = 124 + 16Q + Q2.a. Find the inverse demand function for your firm’s product b. Determine the profit-maximizing level of production and price. Quantity: ? Price: ? c. Calculate your firm's maximum profits. d. I expect profit to (blank), price to (blank), and quantity to (blank).arrow_forwardAssume the figure on the right shows the cost structure for a monopolistically competitive firm selling a particular brand of shoes. MC is the marginal cost curve and AC is the average cost curve. If this firm produces 2 thousand pairs of shoes, does it minimize average cost? How much more would they need to produce to reach minimum average cost? The firm needs to produce an additional thousand pairs of shoes to reach minimum average cost. (Enter your response as an integer.) SEED Price (dollars per pair) 80- 72- 64- 56- 48- 40- 32- 24- 16- 8- 0- 0 1 Quantity (in thousands) MC AG 10 Q 20arrow_forward
- You are the manager of a monopolistically competitive firm, and your demand and cost functions are given by Q = 36 − 4P and C(Q) = 4 + 4Q + Q2a. Find the inverse demand function for your firm’s product. b. Determine the profit-maximizing price and level of production. c. Calculate your firm’s maximum profits. d. What long-run adjustments should you expect? Explainarrow_forwardYou are the manager of a monopolistically competitive firm, and your demand and cost functions are given by Q = 18 – 2P and C(Q) = 2 + 2Q + 0.5Q2. a. Find the inverse demand function for your firm’s product. b. Determine the profit-maximizing price and level of production. c. Calculate your firm’s maximum profits.arrow_forwardYou are managing a firm with market power, and you think the price elasticity of demand for your product is between 1.3 and 1.5. You estimate that your marginal cost is between $55 and $70. The price that you should set would range between $ and $. (Round your answers to two decimal places.) If you refine your estimate of the marginal cost to $80, the price you should set would now range between $ and $ (Round your answers to two decimal places.)arrow_forward
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