Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 3 Suppose that a firm in an oligopolistic industry faces the following kinked demand for its product: Q1 = 100 - P Q2 =

image text in transcribed
Question 3 Suppose that a firm in an oligopolistic industry faces the following kinked demand for its product: Q1 = 100 - P Q2 = 160 - 2P where Q represents units of output and P the price of the product. Suppose further that the firm's total cost equation is given by the equation: TC = 100+ 30Q (a) What are the profit-maximizing price and output? (b) Between what values may marginal cost vary without causing a change in the equilibrium price and quantity? (c) Calculate the maximum profit for this firm. (d) Suppose that the firm's total cost of production was to increase to: TC = 140 + 50Q Will this alter the firm's profit-maximizing price and output level? Explain carefully. Calculate the maximum profit for this firm. (2+3+2 + 3 = 10 marks)Question 3 Suppose that a firm in an oligopolistic industry faces the following kinked demand for its product: Q1 = 100 - P Q2 = 160 - 2P where Q represents units of output and P the price of the product. Suppose further that the firm's total cost equation is given by the equation: TC = 100+ 30Q (a) What are the profit-maximizing price and output? (b) Between what values may marginal cost vary without causing a change in the equilibrium price and quantity? (c) Calculate the maximum profit for this firm. (d) Suppose that the firm's total cost of production was to increase to: TC = 140 + 50Q Will this alter the firm's profit-maximizing price and output level? Explain carefully. Calculate the maximum profit for this firm. (2+3+2 + 3 = 10 marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Development Economics In The Twenty-First Century

Authors: Claudia Sunna, Davide Gualerzi

1st Edition

1317219961, 9781317219965

More Books

Students also viewed these Economics questions

Question

Behaviour: What am I doing?

Answered: 1 week ago