26 May 2019

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.)

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Hubert Koch
Hubert KochLv2
27 May 2019

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