Please answer all questions and submit your answers by 12:30 PM on Thursday, December 6. You may submit either by using the dropbox on Blackboard or by submitting it into the appropriate envelope in my mailbox in room 224. Please clearly label all pages you submit with your name and the CRN of your course. Please fasten all pages you submit by, e.g., stapling them or paperclipping them together. Please do not use horseshoes bent into the shape of a paperclip. This activity addresses learning outcome 4 on the syllabus and draws primarily on chapters 12-15 from your text.
Quantity
Price
Total Revenue
Total Cost
Profit
400
30
600
25
800
20
1000
15
1200
10
1400
5
1600
0
The marginal cost to produce one barrel of oil is $20. The market demand is listed above. There is no fixed cost, and the average total cost is therefore equal to the marginal cost ($20).
If the oil market is perfectly competitive, what quantity will be produced? What price will be charged? What will the firm's profit be?
If this is a monopolistic firm, what quantity will be produced? What price will be charged? What will the firm's profit be? Show your work.
Using your previous answer, assume that the monopoly is really two firms (Speyside Oil and Islay Oil) colluding. Suppose that they agree to produce the profit-maximizing quantity you determined above, but that Speyside Oil produces an extra 200 units (while Islay Oil keeps its word). What quantity will be produced? What price will be charged? What is each firm's profit?
Using your previous answer, assume that instead of Islay Oil keeping its word, each firm produces an extra 200 units. What quantity will be produced? What price will be charged? What is each firm's profit?
Please answer all questions and submit your answers by 12:30 PM on Thursday, December 6. You may submit either by using the dropbox on Blackboard or by submitting it into the appropriate envelope in my mailbox in room 224. Please clearly label all pages you submit with your name and the CRN of your course. Please fasten all pages you submit by, e.g., stapling them or paperclipping them together. Please do not use horseshoes bent into the shape of a paperclip. This activity addresses learning outcome 4 on the syllabus and draws primarily on chapters 12-15 from your text.
|
Quantity |
Price |
Total Revenue |
Total Cost |
Profit |
|
400 |
30 |
|||
|
600 |
25 |
|||
|
800 |
20 |
|||
|
1000 |
15 |
|||
|
1200 |
10 |
|||
|
1400 |
5 |
|||
|
1600 |
0 |
The marginal cost to produce one barrel of oil is $20. The market demand is listed above. There is no fixed cost, and the average total cost is therefore equal to the marginal cost ($20).
If the oil market is perfectly competitive, what quantity will be produced? What price will be charged? What will the firm's profit be?
If this is a monopolistic firm, what quantity will be produced? What price will be charged? What will the firm's profit be? Show your work.
Using your previous answer, assume that the monopoly is really two firms (Speyside Oil and Islay Oil) colluding. Suppose that they agree to produce the profit-maximizing quantity you determined above, but that Speyside Oil produces an extra 200 units (while Islay Oil keeps its word). What quantity will be produced? What price will be charged? What is each firm's profit?
Using your previous answer, assume that instead of Islay Oil keeping its word, each firm produces an extra 200 units. What quantity will be produced? What price will be charged? What is each firm's profit?
