Reference no: EM131195271
Your consulting firm was just granted an exclusive contract for your state. You now must decide your pricing policy, given the following relationships: P = $1400 – 0.0004Q MR = $1400 – 0.0008Q AVC = $1000 where P is the price, Q the quantity, and AVC the average variable cost. The firm will encounter no fixed costs, and all revenue is after taxes. As your firm has been granted an exclusive contract, your pricing and output decisions will be those of a monopolist. Tasks: 1. Using the data above, calculate the output the firm will provide. 2. Determine the price at this output level. 3. Complete the Microsoft Excel Template given below using the data in the problem. ( I could not enter the chart as an excel spreadsheet but I think its obvious what needs to be calculated... Price, MR, MC, TR, TC, and Profit using the numbers provided needs to be determined and placed in a spread sheet) Quantity Price MR MC TR TC Profit 0 100,000 150,000 200,000 250,000 300,000 350,000 400,000 450,000 500,000 550,000 600,000 650,000 700,000 750,000 800,000 850,000 900,000 950,000 1,000,000 1,050,000 4. Check whether your data is consistent with your calculations in question 1. Why or why not? Now assume that the state decides to give as many contracts as it can for the same activity, so your firm is now operating in a perfectly competitive market. How will your price and output decisions change? Explain the differences and why these changes happened.
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Pricing and output decisions will be those of monopolist
: Your consulting firm was just granted an exclusive contract for your state. You now must decide your pricing policy, given the following relationships: P = $1400 – 0.0004Q MR = $1400 – 0.0008Q AVC = $1000 where P is the price, Q the quantity, and AVC..
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