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A monopolist has a constant marginal and average cost of $10 and faces a demand curve of QD = 1000 - 10P. Marginal revenue is given by MR = 100 - 1/5Q.
a) Calculate the monopolist's profit-maximizing quantity, price, and profit.
b) Now suppose that the monopolist fears entry, but thinks that other firms could produce the product at a cost of $15 per unit (constant marginal and average cost) and that many firms could potentially enter. How could the monopolist attempt to deter entry, and what would the monopolist's quantity and profit be now?
c) Should the monopolist try to deter entry by setting a limit price?
How would each of the following affect the firm's marginal, average, and average variable cost curves?
Suppose you want to produce WIDGETS in your country. The international price of an imported WIDGET is $50 and pays an import tariff of $10 per unit. Three inputs are needed to produce a WIDGET.
At the end of 2002, the (1-year) interest rate was 1% in the U.S., and 26% in Argentina. Recall that at the same time, the spot rate for the Argentine currency was Peso 4.00/$.
Discuss how each of the following developments would affect the supply of the money, the demand for money, and the interest rate. For each case, describe what happens in closed economy and in small open economy. Describe your answers with diagrams.
Consolidated Drugs, Inc. has spent $4 million developing and testing a new anti-aging drug. Management now estimates that it will cost $2 million to produce and market this new product.
Consider the problem of the book assuming that the utility is Cobb-Douglas (U (C, l) = C α l β )
Given the data of real disposable income and real consumption, draw consumption function, determine the slope-What is the marginal propensity to consume?
If you assume that the forward rate is a predictor of the future spot rate, does it suggest that the Dollar should have appreciated or depreciated from 2001 to 2002? (round to nearest integer)
During the period of airline regulation, the government set airline fares and regulated an air carrier's entry into and exit from particular markets.
Explain, illustrating with graphs as necessary-be sure that the shape of your supply and demand curves make economic sense.
Lawn mowing services are supplied by a host of individuals in the suburb of Westbrook-Algebraically determine the equilibrium industry price/output combination.
Suppose you're an economic advisor in charge of trying to raise a maximum level of tax revenue for the government. You consider taxing the suppliers in the market for corn, a major agricultural product in the United States.
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