Reference no: EM13853601
A monopoly firm faces a demand curve given by the following equation: P = $500 − 10Q, where Q equals quantity sold per day. Its marginal cost curve is MC = $100 per day. Assume that the firm faces no fixed cost. You may wish to arrive at the answers mathematically, or by using a graph (the graph is not required to be presented), either way, please provide a brief description of how you arrived at your results.
a) How much will the firm produce?
b) How much will it charge?
c) Can you determine its profit per day? (Hint: you can; state how much it is.)
d) Suppose a tax of $1,000 per day is imposed on the firm. How will this affect its price?
e) How would the $1,000 per day tax its output per day?
f) How would the $1,000 per day tax affect its profit per day?
g) Now suppose a tax of $100 per unit is imposed. How will this affect the firm’s price?
h) How would a $100 per unit tax affect the firm’s profit maximizing output per day?
i) How would the $100 per unit tax affect the firms profit per day?
|
Compute the equilibrium price and quantity in this market
: Consider a market characterized by the following inverse demand and supply functions: PX = 10 - 2QX and PX = 2 + 2QX. Compute the equilibrium price and quantity in this market.
|
|
Irrationality-rising real wage-excessive aggregate demand
: "I'd rather have a 1% pay cut when prices fall by 3% than a 5% pay increase when the rate of inflation is 8%." This is an example of: Irrationality, Rising real wage, Deflation always being better than inflation, Excessive aggregate demand.
|
|
The mean height for a population
: The mean height for a population is 65 inches with a standard deviation of 3 inches. Let A and B denote the events below: A = The mean height in a random sample of 25 is within 1 standard deviation of the population mean.
|
|
In hypothesis testing we must balance the 2 types
: In hypothesis testing we must balance the 2 types of errors, Type I and Type II. This is not unlike what happens in a jury trial. This week we will discuss the similarities and differences between hypothesis testing and the trial of a defendant. H..
|
|
Monopoly firm faces demand curve
: A monopoly firm faces a demand curve given by the following equation: P = $500 − 10Q, where Q equals quantity sold per day. Its marginal cost curve is MC = $100 per day. Assume that the firm faces no fixed cost. How much will the firm produce? Can yo..
|
|
What is the value of a preferred stock
: What is the value of a preferred stock that pays a perpetual dividend of $100 at the end of each year when the interest rate is 6 percent?
|
|
A group of friends gather together to play monopoly
: A group of friends gather together to play Monopoly on a Saturday night. Unfortunately, they do not find any dice. They only have a fair coin at hand. Can you help them design a mechanism to sample the numbers one to six with equal probability by onl..
|
|
Why is the continuing income inequality
: Why is the continuing income inequality in the US a problem for the economy? Does it matter that so many people own such a low percentage of total wealth in this country?
|
|
What would happen to producer and consumer surplus
: Let’s say the current administration decides to make a college education more affordable, so they establish a price ceiling of $50 per credit hour for community colleges, $75 per credit hour for four year institutions, and $100 per credit hour for gr..
|