Reference no: EM132519233

1.T/F. Market failure is a market condition in which market participants are monopolists who have market power so that the monopolist assumes that market demand is in accordance with the demand of the individual monopolist, and prices are set by monopolists with formulas P>MC.

2. Suppose you are the manager of a watchmaking company operating in a perfectly competitive market. The company's cost function is C = 100 + Q2, where Q is the output level and C is the total cost. (MC is 2Q. FC is $100). If the selling price is $60, how many hours must be produced to get maximum profit? What is the value of the profit generated? At what minimum price level does the company produce in a positive condition? Draw the curve.

3. Show with a graphic curve and explain a situation in a monopolistic market where the company will decide to leave the market.

4. A company has a total revenue of 76500 USD with an equilibrium quantity of 225 units. The total cost is 90000 USD with a fixed fee of 67500 USD. Questions: (a) What is the price of equilibrium, AVC and AC? ; (b) Draw the curve, and explain the decision about the company in the long run.