Derive the inverse demand and marginal revenue curves

Assignment Help Econometrics
Reference no: EM131335925

Suppose that the demand for bentonite is given by Q = 40 - 0.5P, where Q is in tons of bentonite per day and P is the price per ton. Bentonite is produced by a monopolist at a constant marginal and average total cost of $10 per ton.

a. Derive the inverse demand and marginal revenue curves faced by the monopolist.

b. Equate marginal cost and marginal revenue to determine the profit-maximizing level of output.

c. Find the profit-maximizing price by plugging the ideal quantity back into the demand curve. d. How would your answer change if marginal cost were instead given by MC = 20 + Q?

Reference no: EM131335925

Questions Cloud

Characteristics of ethical leadership : What do you believe are the most important characteristics of ethical leadership? Describe the relationship between the ethical leader and the follower. Why is this relationship important for organizations that are attempting to do the right thing?
Write questions regarding democracy and difference : You have chosen film, cinema, in my work in order to theorize difficult questions regarding democracy and difference. There are, however, many points of caution in choosing to use film. Films often can reinforce and affirm stereotyped and demean..
Effects of choosing the wrong major : Write a five paragraph essay - What are some possible effects of choosing the wrong major?
Description of the business : Again, do some research on this business and prepare a 1-2 page report. Your report should cover the following points. Use your research to develop your own opinions, interpretations and conclusions about this business.
Derive the inverse demand and marginal revenue curves : Suppose that the demand for bentonite is given by Q = 40 - 0.5P, where Q is in tons of bentonite per day and P is the price per ton. Bentonite is produced by a monopolist at a constant marginal and average total cost of $10 per ton.
Evaluate financial opportunity presented by the companies : Evaluate the financial opportunity presented by the companies. If the team was going to lend money to one of the companies reviewed, which one would it be? Defend the team's decision.
What new problems does conformity create : Content analysis of mass media content focusing on deviance within a modern society, evaluated according to a rubric - -What problems are avoided when people conform and what new problems does conformity create?
Stages of growth a business organization : In 250 to 500 words, describe the characteristics of each of the four stages of growth a business organization might experience. Provide examples to support your description.
Recent acts involving nationalization in venezuela : Write a 1-2 page essay considering whether the recent acts involving nationalization in Venezuela and Bolivia are in conformity with recognized international standards. You may compare these acts with the expropriation of foreign assets in China a..

Reviews

Write a Review

Econometrics Questions & Answers

  Compute the amount of each of the 12 payments

A person arranges to repay a a$1000 bank loan in 10 equal payments at a 10% annual interest rate. Immediately after his third payment he borrows $500, also at 10% annual interest rate. When he borrows the $500, he talks the banker into letting him..

  What does the heckscher-ohlin theory postulate

Which force do Heckscher and Ohlin identify as the basic determinant of comparative advantage and trade?

  Estimate moving average models

This exercise will demonstrate through a simple example how to use maximum likelihood or method of moments to estimate moving average models. Consider the MA(1) model Yt = εt + θεt-1 where εt is iid N(0, σ2)

  Determine the possible circumstances

Determine the possible circumstances under which the company should discontinue operations. Suggest key actions that management should take in order to confront these circumstances. Provide a rationale for your response.

  Estimate will farma reap 500000 dollar in additional revenue

Farma Inc. is working on the development of a new drug to combat Fingulesa. It has identified two strategies to pursue. Strategy one has a probability of success of 40% and strategy 2 has a probability of success of 60%.

  What would be the net change in real gdp

The "graying of America" will substantially increase the fraction of the population that is retired in the decades to come. To illustrate the implications for U.S. living standards, suppose that over the 49 years following 2009 the share of the p..

  How many units would be consumed domestically

Suppose that in the domestic market for computer chips the demand is Pd = 110 Qd . The domestic supply is Ps = 10 + Qs . Foreign suppliers would be willing to supply any number of chips at a price of 30$.

  How many popsicles will be sold per day

at a price of $1 each, 100 popsicles are sold per day in the perpetually hot town of Rostin. Consider the elasticity of supply. In the short run, a price increase from $1 to $2 is unit-elastic (Es = 1.0). So how many popsicles will be sold each da..

  Prepare the general journal entry to record the cash payment

Prepare the general journal entry to record the cash payment for the purchase assuming the discount was forfeited and the net method of recording purchase discounts is used.

  How much profit will the monopolist make

Suppose a monopolist faces the following demand curve: P = 596 - 6Q. Marginal cost of production is constant and equal to $20, and there are no fixed costs. a) What is the monopolist's profit-maximizing level of output? MR = (P-MC)*Q MR = (596 - 6Q -..

  Determine what degree of concentration it exhibits

Industry A is composed of five large firms and 100 small firms. The market shares of the five largest firms are, respectively, 30, 25, 20, 15, and 10. The 100 small firms together have the remaining market share. Calculate the Herfindahl-Hirshman ..

  What is the equivilent annual cost for keeping the computer

The local computer shop will sell her a new system for $4000, inlcluding the new graphic software that she wanted, although, she can cope with the software that she currently owns. Her own comptuer will last 2 more years, and will then have a salv..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd