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Suppose a monopolist faces a market demand given by the inverse demand function p = 10-q; and a total cost C(q) = 2q.
1.) what is the monopolist's optimal price and quantity? What is the total social surplus?
2.) Suppose the government subsidizes the monopolist by paying him 2 for every unit that the monopolist produces and sells. What pirce would be offered in the market? What would be the total social surplus?
3.) Consider another policy where the government could impose a price ceiling p on the monopolist. If the government were interested in maximizing social surplus, what would be the optimal value of p when considered from the point of view of the government? What would be hte total social surplus?
If the merged firm were able to exploit economies of scale it would affect costs, may be even marginal costs. Assume the marginal cost of the merged firm was not 40, but 30. Is the merger profitable in this case?
A monopolist that practices perfect price discrimination will choose an output level where marginal revenue is equal to marginal cost to maximise profit.
Which of the following statements best describes the retail market for electricity - Estimate the (own) price elasticity (of demand).
Derive the firm's supply curve, expressing quantity as a function of price. Derive the market supply curve if North Carolina Textiles is one of 1,000 competitors. Calculate market supply per day at a market price of $47 per unit.
You can use monetary and fiscal policies to affect aggregate demand but you cannot affect aggregate supply in the short run. How would you respond to the following scenarios?1. A surprise increase in investment spending 2. Catastrophic floods that ..
Employ the following equation to demonstrate why the firm producing at the output level where MR=MC will also be able to maximize its total profit
Supporter of free market systems discuss that free enterprise leads to more efficient production and better response to changing customers preferences.
Discuss how is the liquidity money (LM) curve derived and determine what impacts it and how does it impact the global economy? Provide examples and support your claims.
First ignore the implicit constraints: 8 i; xi 0 and give the FOCs. Then take them into account and give the Kuhn-Tucker Conditions. Simplify your expressions as far as you can.
Cubby Company entered into a lease contract for ten photocopy machines for its corporate headquarters. The lease contract qualifies as an operating lease in all terms except there is a bargain buy option.
Assume that the government proposes to cut taxes while maintaining current level of government expenditures. To finance this deficit, it may either
Determine the short run average variable cost and the marginal cost functions. Determine the output level that minimizes short run average variable costs
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