Find the average cost pricing

Assignment Help Microeconomics
Reference no: EM13877301

Instead of pursuing profit maximization through marginal cost pricing, the reg- ulated natural monopolists are required to follow the average cost pricing. In the average cost pricing, a natural monopolist firm sets its price at the level where the demand curve intersects the average cost ATC curve. This policy, compared to marginal cost pricing, leads to production of a larger volume of output at a relatively lower price.

What is the level of output and price if a natural monopolist with the cost function TC = 0.3Q3- 8Q2+ 120Q and market demand function

P = 100 - Q follows the average cost pricing? (From 2 possible solutions choose the larger one.) Compare this solution to the profit maximizing solution.

Reference no: EM13877301

Questions Cloud

Stress-strain behavior for a steel alloy : Figure shows the tensile engineering stress-strain behavior for a steel alloy. (a) What is the modulus of elasticity?
What is the firm''s total wage bill : A firm is competitive in both product and resource market. The firm's short run production function is given by Q = 0.5L1/2 where L is the labor input. Assume the wage rate is $10 and the firm's fixed cost is 100. If the price of the good in the m..
What is the firm''s total wage bill : A firm is competitive in both product and resource market. The firm's short run production function is given by Q = 0.5L1/2 where L is the labor input. Assume the wage rate is $10 and the firm's fixed cost is 100. If the price of the good in the m..
The limit on the amount of wage income : If the government raised the limit on the amount of wage income that is subject to the F.I.C.A. tax, this would: A. Move the Lorenz curve further from the line of income equality  B. Have no effect on the Lorenz curve
Find the average cost pricing : What is the level of output and price if a natural monopolist with the cost function TC = 0.3Q3- 8Q2+ 120Q and market demand function P = 100 - Q follows the average cost pricing? (From 2 possible solutions choose the larger one.) Compare this so..
Strategies for successful health care marketing : Describe three different strategies for successful health care marketing and public relations.  Which is your personal favorite?  Why?
Perpetual preferred stock : 1) Johnson Corporation JUST PAID a dividend of $4.63.  The expected growth rate on dividends is 8 percent.  What is the current price of this stock if the required rate of return is 10 percent?
What is taylor rule : What is Taylor rule ?  please write very short paragraph.
Diffract meter and monochromatic x-radiation : Figure shows an x-ray diffraction pattern for a-iron taken using a diffract meter and monochromatic x-radiation having a wavelength of 0.1542 nm; each diffraction peak on the pattern has been indexed.

Reviews

Write a Review

Microeconomics Questions & Answers

  What would an approach or philosophy look from each economy

Pretend you are a neoclassical (free-market or environmental economist), new institutional (transaction cost or ecological), and instutional economist-from the perspective of the cost benefits of "going green" for major utilities (electricity, was..

  Describing how specific system used in an organization

Describing how specific system used in an organization

  Charge the interest rate on credit cards

Because credit card companies and banks must charge the same interest rate on credit cards to all borrowers, there is an adverse selection problem with credit cards.

  Does player a have a dominant strategy

1.Suppose that two players are playing the following game. Player A can choose either Top or Bottom, and Player B can choose either Left or Right. The payoffs are given in the following table where the number on the left is the payoff to Player..

  Public policy could result in three possible outcomes

Presume a proposed public policy could result in three possible outcomes: (1) present value of net benefits of $4,000,000, (2) present value of net benefits of $1,000,000, or (3) present value of net benefits of –$10,000,000 (i.e., a loss).

  Legislative bodies to impose barriers to entry

Some firms will lobby their legislative bodies to impose barriers to entry. Can anyone think of groups or firms that do this?

  Aimed at understanding the breakeven selling price

This problem is aimed at understanding the breakeven selling price for a company. Assume you have started up a company for an initial investment called “Invest”. The return you expect is WACC. The investment can be written off over the length of the ..

  Demand function-profit fuction

Determine Acme's total profit function. Assuming that Acme is effectively able to charge different prices in the two markets, what are the profit-maximizing price and output levels for the product in the two markets? What is Acme's total profit und..

  Supply function for relation between price and quantity

derived a supply function for the relation between price and quantity

  General-equilibrium models and partial-equilibrium models

1. Explain the difference between general-equilibrium models and partial-equilibrium models. How are the numbers of endogenous and exogenous variables related to whether a model is a partial-equilibrium or general-equilibrium model?

  Write down the differences between mena and europe write

compare menas socio-economic and political structures with those prevailing in other regions of the world during the

  Change of other items in the cpi basket

Why did the prices of the other items change? What is the probable impact of the change of other items in the CPI basket?

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