ECON 102 Lecture Notes - Lecture 25: Average Cost, Monopolistic Competition
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SB a medium-sized foundry specializing in the manufacturing of heavy duty pipe for industrial uses, sells its product into a monopolistic competitive industry. SB Demand and total cost functions are as follows:
P = $4,500 - $1Q (Demand Curve) |
TC = $150,000 + $400Q (Total Cost Function) |
where P is the price, Q is output (thousands of feet of heavy gauge pipe) and TC is the total cost per period of time. |
A. Determine the short-run profit-maximizing price/output combination and profit level for Sifuentes Foundry. |
B. Compute price, output and profits under the assumption that Sifuentes seeks to maximize total revenue. |
C. What output, price and economic profit will occur in longer-run equilibrium? (Assume longer-run equilibrium occurs through a parallel leftward shift in the Demand curve.)