Calculate algebraically for equilibrium

Assignment Help Finance Basics
Reference no: EM13769883

Robert's New Way Vacuum Cleaner Company is a newly started small business that produces vacuum cleaners and belongs to a monopolistically competitive market. Its demand curve for the product is expressed as Q = 5000 - 25P where Q is the number of vacuum cleaners per year and P is in dollars. Cost estimation processes have determined that the firm's cost function is represented by TC = 1500 + 20Q + 0.02Q2.

Show all of your calculations and processes. Describe your answer for each question in complete sentences, whenever it is necessary.

1. What are the profit-maximizing price and output levels? Explain them and calculate algebraically for equilibrium P (price) and Q (output). Then, plot the MC (marginal cost), D (demand), and MR (marginal revenue) curves graphically and illustrate the equilibrium point.
2. How much economic profit do you expect that Robert's company will make in the first year?
3. Do you expect this economic profit level to continue in subsequent years? Why or why not?

Verified Expert

The first question required to use profit maximization in amonopolistic economy to find equilibrium price and output and theprofit made.

What is the percentage change in thee bond price

If the interest rate suddenly falls by 2%/rise by 2% , what is the percentage change in thee bond price. What does it tell about the interest rate risk of longer term bonds.

Compute the maximum growth rate

The Tapley Corporation is trying to determine an acceptable growth rate in sales. While the company wants to increase, it does not want to use any external funds to support su

Draw a diagram showing the possible outcomes

In your diagram, be sure to label the X and Y-axis, the put option strike price, and show the possible results for a money market hedge, a forward hedge, a put option hedge,

Develop a probability distribution

In Gallup's Annual Consumption Habits Poll, telephone interviews were conducted for a random sample of 1014 adults aged 18 and over. One of the questions was "How many cups

What is the average amount of inventory

Cost of goods sold normally equal 75 percent of sales. If 3LS turns over its inventory 20 times during the year, what is the average amount of inventory that is shown on its

What is an agency relationship

What is an agency relationship? When you first begin operations, assuming you are the only employee and only your money is invested in the business, would any agency conflic

Five stages of group development

Did Tuckman's five stages of group development apply to your team? Did some of the stages apply but not others? Explain your reasoning with specific experiences that your te

What are the appropriate loan rates for each firm

The current prime rate is 6.75 percent, the 30-year Treasury bond yield is 4.41 percent, the three-month Treasury bill yield is 3.50 percent, and the 10-year Treasury note y

Write a Review 