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Determine Optimal Price, Quantity and Economic Profit
A firm has a demand function P = 200 – 5Q and cost function: AC=MC=10 and a potential entrant has a cost function: AC=MC=20.a. Determine the optimal price, quantity and economic profit for the firm in the short run.b. If the firm wants to preclude all entry into the market what price, quantity and profit will it choose?c. What price, quantity, and corresponding profit occur if this a purely Competitive market?d. Assuming the demand function is identical for all buyers, determine the two-part tariff that maximizes profit for the firm.e. Determine the optimal price, quantity and economic profit for the firm if it is a pure monopolist.
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