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ECON 101 Quiz: ECON 101 UW Madison SolutionstoQuiz4Summer2015

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turquoisegnu128
31 Jan 2019
School
UW-Madison
Department
Economics
Course
ECON 101
Professor
All

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Document Summary

Demand for type i buyers: p = 20 (1/2)q. Demand for type ii buyers: p = 10 (1/8)q. Suppose there is a single producer of this good and the producer"s mc is given by the equation: Assume that this producer has no fixed costs: (2. 5 points) suppose that this producer can treat this market as two separate markets: the market for. Total revenue from type i buyers = ____________ Total cost from type i buyers = ___________ To find the profit maximizing you need to equate the firm"s mr to its mc: mr = 20 q. P = 20 (1/2)(18) = 20 9 = per unit. Tr = p*q = ( per unit)(18 units) = . Tc = ( per unit)(18 units) = . Profits from type i buyers = tr tc = 198 36 = . Price to type i buyers = ____ per unit______ Quantity to type i buyers = ____18 units______

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Related Questions

A firm has a demand function P = 200 – 5Q and cost function: AC=MC=20 and a potential entrant has a cost function: AC=MC=40.

a. Determine the optimal price, quantity and economic profit for the firm if it is a pure monopolist.

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, calculate the two-part tariff that maximizes profit for the firm.

(Please type in all the answers so that I may understand the handwriting)

A firm has estimated that the demand for its product comes from two types of customers, type I and type II. Each type I customer -there are 30 of them- has a demand curve given by Q = 20 - P, while each type II customer -there are 50 of them- has a demand curve given by Q = 15 - P. The firm's marginal cost is constant and equal to $5. Suppose the firm wants to use a two-part pricing strategy (T; P), and it has decided to set P = $5 (we know this need not be optimal, but this is what the firm has decided to set). With P= $5, the profit-maximizing T is ________.

2. A price-taking firm has a short run cost function SC(q)=3q^{2}+18q+600

a) In Problem #1, we showed that every q<7 would never be the profit-maximizing quantity at any price. Calculate SAVC(q) and MC(q) and use them to explain why for every q>0, there is a P for which that q is the profit-maximizing quantity.

b) Calculate the profit for this firm if the price is P = 72. Using either an integral or geometry, calculate the producer surplus for the firm at P = 72. Explain how the Producer surplus is related to the profit number.

c) Calculate P= p (72)- p (18). Explain how this number is related to the producer surplus.