What are the profit-maximizing price and output levels

Assignment Help Microeconomics
Reference no: EM13923984

Please assist in answering and explaining the following problem:

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

a. 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.

b. How much economic effort profit do you expect that Robert's company will make in the first year?

c. 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.

Reference no: EM13923984

Questions Cloud

Approximate-exact expected real risk premiums on portfolio : Consider the following information about three stocks: Rate of Return If State Occurs State of Probability of Economy State of Economy Stock A Stock B Stock C Boom .20 .34 .46 .50 Normal .40 .25 .23 .20 Bust .40 .03 −.25 −.42. what are the approximat..
What will be its total dividend payment : Rohter Galeano Inc. is considering how to set its dividend policy. It has a capital budget of $3,000,000. The company wants to maintain a target capital structure that is 15% debt and 85% equity. what will be its total dividend payment?
Common disabilities that occur as a result : Primary hypertension is the classification given when there is no clear cause.
Controversial corporate social responsibility : Specify one (1) controversial corporate social responsibility concern associated with Apple.
What are the profit-maximizing price and output levels : 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 t..
A stock has an expected return : A stock has an expected return of 15.5 percent, its beta is 1.65, and the expected return on the market is 12.6 percent. What must the risk-free rate be?
Capital structure consists solely of debt and common equity : WACC and Percentage of Debt Financing Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at rd = 8%, and its common stock currently pays a $4.00 dividend per share (D0 = $4.00). T
What elacticity of demand for bleacher seats at rays games : Suppose the Tampa Bay Rays baseball team charges $10 bleacher seats and sells 250,000 of them over the course of the season. The next season, the Rays intends to increase the price to $12 and sell 200,000 tickets.k- what is the elacticity of dema..
Markup percentage for a box of ginger tea : The Artist's Palette sells high-end art supplies to the art students at three regional art and design schools in Philadelphia, Washington, D.C., and Baltimore. It carries paints, brushes, drawing pads, frames, charcoal, pastels, and other supplies..

Reviews

Write a Review

 

Microeconomics Questions & Answers

  The price of digital cameras falls for consumers

Given the products below and the events that affect them, indicate what happens to demand or supply, and the equilibrium price and quantity in a competitive market. Identify the determinant of demand or supply that causes the shift. Justify your answ..

  According to the quantity theory of prices and money

According to the quantity theory of prices and money, a five percent change in the money supply, holding other variable constant, leads to

  Who are the competitors in the jarred baby food market

Managerial Economics and Business Strategy, 7e Page 1 Proposed Merger between Heinz and Beech-Nut Scrutinized Michael Baye and Patrick Scholten prepared this case to serve as the basis for classroom discussion rather than to represent economic or leg..

  Outline a micro-economic reform issue

Outline a micro-economic reform issue that is relevant to the Australian economy market and how successful do you think these reform measures were and say why referring to some data or research that has been performed.

  Evaluate time warner inc working capital position.

1. Evaluate Time Warner Inc's working capital position.

  The tulsa part particularly self-explanator

Professor's Overview of Module 10 The reading for this lesson (Bowe, sections "Tulsa" and first part of "Saipan" to the bottom of p. 184) brings us to the use and abuse of U.S. visa programs to bring workers into the United States, often from more un..

  There are increasing returns to scale in production

The firm can vary the amounts of two basic chemicals in producing a specialty chemical, but, for quality control reasons, the relative proportions of chemicals must be between 40/60 and 60/40.

  Theory of the ethics of bureaucratic organizations

In your view, should leaders in the public service pursue the "greatest good for the greatest number," or follow a set of moral rules when they make decisions involving difficult ethical issues?

  What imply about residual flows to other environmental media

State how each of the following factors affects the materials balance model: (i) population growth; (ii) income growth; (iii) increased consumer recycling; (iv) increased industrial recycling; (v) increased use of pollution preven- tion technologi..

  Determine what fiscal policy measure has a more direct

determine what fiscal policy measure has a more direct impact to the economy1. an increase in government spending or2.

  Business ownership

Write a letter advising a hypothetical sole proprietor to choose another form of business ownership. By definition, a sole proprietorship is an unincorporated business owned by one person known as the sole proprietor.

  Does popular resentment against free trade simply re?ect

Does popular resentment against free trade simply re?ect economic illiteracy or more deep-seated political issues?

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