The manager of a firm in a monopolistically competitive industry is giving some thought to two important decisions she must make. She knows that: A typical firm in her industry has an own-price elasticity of demand of -2.5 • The advertising elasticity of demand for her firm's product is 0.7 She pays her supplier $30 for each unit of the product her firm sells to consumers • Her firm generates annual revenue of $200,000 Based only on this information: a) What is the profit-maximizing price for her firm's product? b) What is the optimal level of annual advertising expenditure?
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- Economics You are a manager of a monopolistically competitive firm that is currently charging a price of $5 for its product and, at this price you are selling 52,000 units of your product. At this price and quantity combination, you have estimated your own price elasticity of demand to be -2.0 and you have an advertising elasticity of 0.25. What is the optimal amount for you to spend on advertising?Question 9 You have been appointed the new managing director of BOTCHPOWER, which has bought a major stake in Ghana’s ECG and you company is described as a monopolistic competitive firm in the supply of electricity in Ghana. In effect, your firm has the power to discriminate between domestic consumers and commercial consumers of electricity in Ghana. To help you price your services appropriately to maximize profit, you engaged an economist who estimated the demand function for both Domestic consumers and Commercial consumers as: ? = 48 – 0.4? Domestic Consumers -- ? = 20 – 0.1? Commercial Consumers (( Where ?- and ?( are the respective kilowatts (KW) of electricity consumed by Domestic Commercial consumers and ? and ? are their respective prices per kilowatt. If the total cost -( of this BOTCHPOWER company for producing a kilowatt of electricity is given as ?? = 70 + 80?, where ? = ?- + ?(: a) What price will BOTCHPOWER charge per kilowatt to maximize profits: i. With discrimination…FRONT PAGE Pricing Disney+ Disney decided it wanted to provide streaming services directly to customers, rather than renting its library of films and television shows to other streaming services like Netflix. But how successful would a streaming service be? In other words, what did the demand for a "Disney+" streaming service look like? Disney knew that the number of subscribers would depend not just on the attractiveness of the Disney archives, but also on the subscription price. After doing some market research, Disney decided to launch Disney+ at a price of $6.99 a month (or $69.99 per year). When Disney+ was launched on November 12, 2019, 10 million people signed up on the first day-a resounding success! Source: News reports, October-December 2019. Suppose Disney+ changes its monthly subscription price from $7 to $9 per month. Graphically show the impact of this price change in the following markets: a. Popcorn, pizza, and other movie snacks
- You are hired as a consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. Can the firm possibly be maximizing profit? If not, what should it do to increase profit? If the firm is maximizing profit, is the market in a long-run equilibrium? If not, what will happen to restore long-run equilibrium? P < MC, P > ATC P > MC, P < ATC P = MC, P > ATC P > MC, P = ATCYou are the manager of a firm that charges customers $16 per unit for the first unit purchased, and $12 per unit for each additional unit purchased in excess of one unit. The accompanying graph summarizes your relevant demand and costs. a. What is the economic term for your firm’s pricing strategy? multiple choice Third degree price discrimination Fourth degree price discrimination First degree price discrimination Second degree price discrimination b. Determine the profits you earn from this strategy. $ c. How much additional profit would you earn if you were able to perfectly price discriminate?Instructions: In solving this problem, assume the firm cannot sell fractions of a unit. $You are a consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost. P = MC, P > ATCP > MC, P = ATC Illustrating with graph(s), can the firm possibly be maximising profit? If not, what should it do to increase profit? If the firm is profit-maximising, is the firm in a long-run equilibrium? If not, what will happen to restore long-run equilibrium? PLZ EXLAIN MORE DETAILS AND WRITE IT CLEARLY THX!!!
- Exercise 5.5 In this unit we have seen that monopolistically competitive firms could increase the amount they produce and reduce the ATC of production. Why don't they?Exercise 5.1 Describe with the help of graphs the long-term equilibrium of a monopolistically competitive market. What is the relationship between price and ATC? And between the price and the MC?An industry said to be characterized by monopolistic competition is the apparel industry. Suppose you were hired as a consultant by a firm in this industry. How would you advise the firm as to the levels of output, price, input usage, and advertising? What problems might the firm encounter?
- You are hired as a consultant to a monopolistically competitive firm. The firm reports the following information about its price, marginal cost, and average total cost: P>MC, P<ATCP>MC, P<ATC Which of the following statements are true about this firm and the market? Check all that apply. Some firms will exit the market. This firm is in long-run equilibrium. This firm is possibly maximizing profit.Candy bars are produced in a monopolistically competitive market. A profit-maximizing producer finds that marginal revenue equals marginal cost equals $1.50 when output is 500 bars. Also, The average total cost (ATC) is $3 and price is $2 when output is 500 bars. An economist studying this information can conclude that economic profit is -$500 -$450 -$300 $100The following table shows the daily cost data and demand schedule for a typical firm producing board games in a monopolistically competitive market in the short run. Fill in the values in the Marginal Cost, Total Revenue, and Marginal Revenue columns in the following table and then answer the questions that follow. Quantity Price Total Cost Marginal Cost Total Revenue Marginal Revenue Average Total Cost (Вoard games) (Dollars per game) (Dollars) (Dollars) (Dollars) (Dollars) (Dollars) 12.00 13 2 10.00 28 3 9.00 30 4 8.00 36 6.00 40 6. 4.00 60 7 2.00 72 8. 1.00 96 Under monopolistic competition, a typical firm will produce board games at a price of $ per board game in the short run. Based on your calculations, the firm will Fill in the Average Total Cost column in the previous table. Based on your calculations, the level of excess capacity in this monopolistically competitive market is