Reference no: EM13982323
The Blue Dragon Restaurant is a new Chinese Restaurant in town. As the only Chinese restaurant in the area, it faces the following daily demand curve:
Q = 800 - 40 P
where Q is the number of meals it serves per day and P is the average price of its meals. The cost functions of the restaurant have been estimated as follows:
TC = 220 + 6Q + .02 Q2
MC = 6 + .04 Q
ATC = 220/Q +6 + .02Q ; Slope = -220/Q2 +.02
a. Determine the profit-maximizing price of each meal assuming The Blue Dragon is behaving as a monopoly.
b. Determine the profit of the Restaurant.
c. If the company were to produce as a perfectly competitive firm, how much would it produce?
d. What price should it charge as a competitive firm?
e. Would it still make a profit if it behaved like a competitive firm?
As a result of the success of the Blue Dragon other Chinese restaurants start appearing in the area. As the Blue Dragon's customers gradually start trying other (new) Chinese restaurants, its demand curve gets flatter (more elastic) and shifts to the left. In reaction, The Blue Dragon lowers its price and adjust its output to the point that, eventually, its (economic) profit disappears; It becomes equal to zero. At that point the slope of its demand curve becomes -0.02.
f. Determine the new (equilibrium) average price The Blue Dragon charges for its meals.
g. Write the equation for this new (zero profit) demand curve.
|
In order to take the economy to potential output
: Consider the economy of Arcadia. The households of Arcadia spend 90% of their income. There are no taxes and no foreign trade. The currency of Arcadia is called “Arcs”. The level of potential output in Arcadia is 700 billion arcs. Suppose that actual..
|
|
Suppose that marginal propensity to save is equal
: Suppose that marginal propensity to save is equal to 0.25, and the government increases its spending by $200 billion. This new increase in spending is financed by a fresh increase in taxes equal to $200 billion. As a result of this, GDP will:
|
|
Find time for which train is travelling at constant speed
: Calculate the time for which the train is travelling at constant speed, the initial acceleration in m/s2.
|
|
Value of the company common stock
: What would you expect the price of each share to be today, and what is the value of the company's common stock?
|
|
Determine the profit-maximizing price of each meal assuming
: The Blue Dragon Restaurant is a new Chinese Restaurant in town. As the only Chinese restaurant in the area, it faces the following daily demand curve: Determine the profit-maximizing price of each meal assuming The Blue Dragon is behaving as a monopo..
|
|
How the changes occurring in healthcare
: How the changes occurring in healthcare will affect the HIM professional's career. The paper should address the topics studied throughout the term. During each Seminar the instructor will discuss how the unit topic applies to the RHIA exam and to ..
|
|
Roles and functions of human resource management
: 1. Evaluate the roles and functions of Human Resource Management based on its historical context against its contemporary context. 2. Evaluate the planning process involved in human resource planning.
|
|
Explain the consumer responses in both markets
: Suppose the quantity of gadgets demanded is reported to have fallen by 20 units—from 50 to 30 units—as a result of a per-unit-price increase in widgets from $10 to $14, what is the cross-price elasticity of demand? Explain your cross-price elasticity..
|
|
Who was salvador allende
: How did the Peruvian military dictatorship differ from others in South America?
|