Question
So So Green operates a national chain of lawn service providers. So So Green's mid-Atlantic region faces the following segmented demand curves for its basic
So So Green operates a national chain of lawn service providers. So So Green's mid-Atlantic region faces the following segmented demand curves for its basic lawn service:
The monthly demand curve for a quantity reduction is given as : P1 =$25-$0.05Q
The monthly demand curve for a quantity increase is given as: P2 =$32.5-$0.2Q
The company's total cost function is as follows: TC = $75 + $4Q + $0.10Q2
where P is price (in dollars), Q is output (in thousands), and TC is total cost (in thousands of dollars).
A. How would you describe the market structure of this industry? Explain why the demand curve takes the shape indicated above.
B. Calculate price, output, and profits at the profit maximizing level of output.
C. Calculate the current level of marginal cost. Is the current level of marginal cost consistent or inconsistent with the output calculated above being an equilibrium output level for the firm? Explain your answer.
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