4. A pharmaceutical firm is marketing a patented drug it has developed (the firm therefore has monopoly rights over the drug). The demand for the drug is given by Q = 8000 - 8P (MR(Q) = 1000 - ), where P is the price of the drug (in cents), and the total cost of production is TC(Q) = Q2+100Q+10000 (MC(Q) = 2Q + 100). a. Calculate the (monopoly) price of the drug, PM, and the quantity sold, QM b. Suppose now that the drug's patent expires, and other pharmaceutical firms can begin producing it. Assume this result in a competitive supply of the drug, and calculate the long-run competitive equilibrium price and aggregate quantity. Compare these to those you found in part a.
Q: Acad business that is considering its first project. The required equipment investment by the…
A: NPW (Net Present Worth) is another term for Net Present Value (NPV). It's a measure used in finance…
Q: Nominal interest rate (percent per year) 12- a C The graph shows a demand for money curve. Draw a…
A: Money demand is the total amount that the consumer wants to hold either in cash or through bank…
Q: MARR = 8%. Your consultancy business signs on with a new client. The client pays you $5000 up front…
A: The objective of this question is to calculate the precise ERR (Equivalent Annual Rate) of the…
Q: For equipment that has a first cost of $10,500, the estimated operating costs and year-end salvage…
A: The initial costis P= 10500. The salvage value and annual cost change each year.The below table…
Q: What term describes the decrease in general satisfaction a person gets from consuming each…
A: In economics, utility refers to the satisfaction or pleasure that consumers derive from consuming…
Q: The following table shows different combinations of labor and capital that can produce 400 units of…
A: Optimal input combination is that combination of labor and capital where the cost of producing…
Q: 5. Suppose that a firm has a Cobb-Douglas production function Q = KL and that it faces output price…
A: The Cobb-Douglas production function predicts that a uniform percentage increase in all production…
Q: PRICE (Dollars per unit) 350 Z 225 175 Y W 50 Demand 0 10 35 45 70 QUANTITY (Units) For each of the…
A: True or False: The slope of the demand curve is not equal to the value of the price elasticity of…
Q: Microsoft is one of the leading software companies. Prior to 2000, Microsoft’s share of the market…
A: A monopoly market is a market structure in which a single seller, known as a monopolist, dominates…
Q: onsider the extensive form game shown here. The top payoff at a terminal node is for player 1. Find…
A: In an extensive form game, a subgame is a part of the game that has a distinct starting point at a…
Q: FIGURE 6-2 Price Level Ꭰ S Х S D Domestic Product 17. In Figure 6-2, if the aggregate demand curve…
A: Demand may be defined as the amount of goods and services that are consumed by the consumers in…
Q: Every year, there is some form of construction work going on at UF's campus. In January 2018, bids…
A: The average inflation rate is a measure of the rate at which the general level of prices for goods…
Q: PRICE (Dollars per unit) 270 Y Supply 135- 30 22.5 - W 0 V 6 15 48 54 QUANTITY (Units) For each of…
A: A.Between V and W: ElasticBetween X and Y: InelasticB. TrueExplanation:Question A. To calculate the…
Q: The Rosebud Motel is a must-stay for any road-tripper or weary traveler. The motel fils each of its…
A: The cost-plus pricing strategy makes a seller charge a price that covers all its costs of production…
Q: PRICE (Dollars per scooter) Profit maximization in the cost-curve diagram e following graph plots…
A: In this question we are given with cost curves of a firm operating in the competitive market for…
Q: Suppose the demand for a product is given by D (p) = 5p+ 227. A) Calculate the elasticity of demand…
A: Elasticity of demand is the term which is used to denote how much changes in the quantity demanded…
Q: Suppose that Felix and Janet represent the only two consumers of iced coffee in some hypothetical…
A: The price, quantity demanded by Janet and the quantity demanded by Felix is given…
Q: Find the cost function for the marginal cost and fixed cost. C = Marginal Cost Fixed Cost (x = 0) dC…
A: The marginal cost function is given below:The fixed cost of production (at x =0), is…
Q: the pretax cost savings are $100,000 per year, what is the NPV of this project? egative answer…
A: Before making an investment, the companies will analyse the benefit and profit that can be obtained…
Q: Our model takes the price level � as given in the short run, but in reality, the currency…
A: The issue is whether a fiscal expansion that remains permanent through an increase in government…
Q: The annual private supply and demand for cars in the United States is given in the figure below.…
A: Economics refers to the study of scarcity and its implications for the use of resources, production…
Q: Using the midpoint method, the price elasticity of demand for jackfruit between point A and point B…
A: Using the midpoint method, price elasticity is calculated by taking the average percent change in…
Q: The table below shows cost data for producing different amounts of cleaning products. Suppose this…
A: Economics refers to the study of scarcity and its implications for the use of resources, production…
Q: Suppose the demand for a product is given by D(p) = -2p+ 167. A) Calculate the elasticity of demand…
A: Price elasticity of demand shows the responsiveness of a percentage change in price to a percentage…
Q: Figure 31-3 On the following graph, MS represents the money supply and MD represents money demand.…
A: The objective of the question is to identify the event that could explain the shift in the money…
Q: In a short-term perfectly competitive market, profit-maximizing company A's marginal cost is 50,…
A: In a perfectly competitive market, a firm maximizes its profit by producing at the level where…
Q: Landberg Inc. is considering a project which would require a $1.85 million after-tax investment…
A: The project requires after-tax investment requires $1.875 million. 45% probability is present for…
Q: An investment of $10,000 can be made that will produce uniform annual revenue of $5,310 for five…
A: Initial investment CF0=-10,000Annual revenue =$5310 Salvage value or market value at the end of 5…
Q: Consider an increase in the supply of labor due to immigration, and use the long-run model. Class…
A: The Rybczynski Theorem is an economic principle that describes the relationship between the…
Q: do fast.
A: The objective of the question is to calculate the approximate External Rate of Return (ERR) for a…
Q: Refer to Figure 10-1. The industry creates negative externalities. no equilibrium in the market. O…
A: Economics refers to the study of scarcity and its implications for the use of resources, production…
Q: Initially a firm's wage is w = $24 and its rental cost of capital is r = $24. After its wage rate…
A: A line that depicts various combinations of two input factors (usually capital and labor) a firm can…
Q: 8. Total economic surplus The following graph plots the supply and demand curves in the market for…
A: The demand curve is the downward-sloping curve. The supply curve is the upward-sloping curve.The…
Q: 1. Determinants of the price elasticity of demand Consider the following list containing several…
A: Elasticity is defined as the responsiveness to change in one variable. When changes in price will…
Q: The following table presents the weekly demand and supply in the market for sweatpants in Dallas.…
A: Market equilibrium in economics occurs when the amount of a product or service available (supply) is…
Q: How does monetary policy influence consumer spending? Discuss.
A: Monetary policy refers to the actions undertaken by a country's central bank to control and regulate…
Q: Suppose that Brian and Crystal are the only suppliers of iced lattes in some hypothetical market.…
A: In economics, a supply schedule is a table that depicts the link between a good's price and amount…
Q: What concept describes the situation where the increase in the production of one good leads to a…
A: The issue is recognizing the financial idea that makes sense of the compromise included while…
Q: Question: Which of the following fiscal policy tools involves the government spending more money…
A: The correct answer is:a) Expansionary fiscal policyExpansionary fiscal policy involves the…
Q: Your professor has $20 to spend on Sour Patch Kids and Cherry Coke Zero, the two supplies most…
A: A budget constraint, in economics, refers to the limitation a consumer faces when trying to buy…
Q: The Company wants to level the production mix at the pacemaker. The average daily demand and their…
A: Demand refers to the amenability of a consumer to buy a good or service.
Q: 1. (x,y) A is the original consumption bundle of this consumer. Using graph, show the optimal bundle…
A: When the question of choice arises at the consumption of two goods at various combinations, the…
Q: 10 A competitive firm has the following total cost function: TC(q) = 10 + q if q>0, TC(q) = 0 if q =…
A: Given Total cost function TC(q) = 10 + q for q > 0 and TC(q) = 0 for q = 0, and the capacity…
Q: Instructions: Enter your answer as a whole number. If you are entering a negative number include a…
A: Marginal propensity to consume (MPC) refers to the proportion of aggregate raise spent for the…
Q: An industry consists of three firms with sales of $345,000, $750,000, and $215,000. a. Calculate the…
A: Both HHI and C4 measure market concentration. Lower values indicate more competition, while higher…
Q: At 8% interest, find the total EUAC of an asset with an initial cost of $80,000, an estimated…
A: initial cost of $80k,estimated salvage value of $20k Interest rate = 8%
Q: Under the world trade rules under the World Trade Organisation (WTO) regime National Treatment is…
A: The objective of the question is to discuss the advantages and disadvantages of National Treatment…
Q: As the assistant manager of a restaurant, how many servers will you need given the following…
A: To answer this question, we will first find the effective dinners per server and then using that…
Q: Downvotw downvote Dont answer will give downvote Nash Equilibrium is Group of ariswer choices a…
A: Nash equilibrium is a concept in game theory that describes a situation in which each participant in…
Q: In a market economy, what mechanism determines the price and quantity of goods sold? A) Government…
A: The issue is to distinguish the system in a market economy that normally lays out the costs and…
Step by step
Solved in 1 steps with 1 images
- Suppose a monopoly market has a demand function in whichquantity demanded depends not only on market price (P) butalso on the amount of advertising the firm does (A, measuredin dollars). The specific form of this function isQ =(20 - P2) (1 + 0.1A - 0.01A2).The monopolistic firm’s cost function is given byC = 10Q + 15 + A.a. Suppose there is no advertising (A = 0). What outputwill the profit-maximizing firm choose? What market price will this yield? What will be the monopoly’sprofits?b. Now let the firm also choose its optimal level of advertising expenditure. In this situation, what output levelwill be chosen? What price will this yield? What will thelevel of advertising be? What are the firm’s profits in thiscase? Hint: This can be worked out most easily by assuming the monopoly chooses the profit-maximizing pricerather than quantity.Consider a mature maket with a demand given by P=105.4-10Q The cost of production is given by C=10Q For many years this market has been served by a monopolist. How much profit would the firm lose if it is forced to behave as a competitive firm In all your calculations use numbers with 4 decimal places.Babydrink is a monopolist due to its patent in infant formula. The total cost for production in dollars is given by C(q) = 24q² + 600q +9600. The market demand it faces is p = 700 - q. (a) To maximize profit, how much should Babydrink produce? And what is the price it charges? (b) Verify (answer from a) gives and maximum and not minimum?
- You are a consultant who is advising a monopoly on the optimal pricing strategy. Your analysis has yielded the following information. • The marginal cost (MC) is $3. • The demand equation is P = 90 - 3Q . The total cost (TC) is given by 35+ 3Q The marginal revenue (MR) is given by 90 - 6Q Based on this information, answer the following questions. Show FULL calculations! (a) Following the concepts of profit maximization, what is the profit maximizing quantity for this monopoly? (b) Following the concepts of profit maximization, what is the profit maximizing price for this monopoly? (c) Following the concepts of profit maximization, what is the monopoly's profit at the profit maximization point?What quantity (Q) will the profit - maximizing monopolist below produce, what price (P) will they charge, and how much will their profit or loss be? a.) Q = 8 units P = $5,000 Profit = $40,000 b.) Q = 8 units P = $7,000 Profit = $ 24,000 c.) Q = 8 units P = $4,000 Profit = $32,000 d.) Q = 8 units P = $7,000 Profit = $56,000 Price (in thousands of dollars) $11 $10 $9 y C S = MC ATC $8 $7 $6 $5 AVC ATC $4 AVC $3 Firm Demand $2 $1 0 2 4 6 8 10 12 14 Quantity of MR Output Market = Firm5. A monopolist with cost function c(Q)=faces an inverse demand function given by P(Q)= √Q' (a) Find the elasticity of demand with respect to price. (b) Assuming that the monopolist uses MR = MC pricing rule, find his profit maximizing price, p", and output level, q". (c) Find the marginal cost at q" and calculate the Lerner index. (d) Does the monopolist's market power depend on his cost curve? In particu- lar, does it depend on a? Is your answer surprising?
- The monopolist faces the demand curve D(p) = 100 – 2p. Its cost function is c(y) = 2y. What is your optimal level of production and prices? Solve mathematically and graph2) The Epson Company is a monopolist in the market and faces the demand curve shown in the figure below. The firm's marginal cost curve is MC= 100 +2Q. a. What is the firm's profit-maximizing output and price? Price ($/unit) 400 0 D 200 Quantity of printers (thousand) b. If the firm's demand changes to P = 300 - Q while its marginal cost curve remains the same, what is the firm's profit-maximizing level of output and price? How does this compare to your answer for (a)? c. Draw a diagram showing these two outcomes. Holding marginal cost equal, how does the shape of the demand curve affect the firm's ability to charge a high price? (bonus question 5 points)P, MR, AC, MC B A Demand G | JH MC AC MR Quantity a) Identify the quantity of output the monopoly wishes to supply and the price it will charge. b) Suppose demand for the monopoly's product increases dramatically shifting it to the right. Using the new demand curve determine what happens to the marginal revenue as a result of the increase in demand? Assuming that the marginal cost curve stays the same. how will the new profit-maximizing quantity and price change?
- Monopoly - End of Chapter Problem Download Records decides to release an album by the group Mary and the Little Lamb. It produces the album with no fixed cost, but the total cost of creating a digital album and paying Mary her royalty is $6 per album. Download Records can act as a single-price monopolist. Its marketing division finds that the demand schedule for the album is as shown in the accompanying table. a. Calculate the total revenue and marginal revenue per album for P = $16, $14, and $12. TRP $16: $ TRP $14: $ Price of album $22 20 18 16 14 12 10 8 Quantity of albums demanded 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000TotsPoses Inc., a profit-maximizing business, is the only photography business in town that specializes in portraits of small children. George, who owns and runs TotsPoses, expects to encounter an average of eight customers per day, each with a reservation price (shown in the following table). Assume George has no fixed costs, and his cost of producing each portrait is $12. a. How much should George charge if he must charge a single price to all customer? At this price, how many portraits will George produce each day? What will be his economic profit? b. How much consumer surplus is generated each day at this price? c. If George is very experienced and knows the reservation prices of each customer, how many portraits will he produce each day and how much economic profit will he earn? d. Assume George charges only 2 different prices. He know that customers with reservation prices above $30, will never use coupons and the customers with reservation prices below will always use…2. A monopolist’s demand function is given by D(p) = 90 − 2p. This monopolist is facing a cost function, C(y) = (1/2)y2 + 600. (a) Is this a natural monopoly? Explain. (b) How can government regulate this monopolist to produce the efficient amount of products?