Please plot any curves needed. Thank you Question 2Suppose that a Chinese solar panel manufacturer has an upward sloping marginal cost functiongiven by MC = 10 Q where Q is the total number of solar panels produced by this firm. Denotethe number of panels sold in the Chinese market by QH and the number of panels sold in the USmarket by QF. The firm faces a downward sloping demand curve in the Chinese market given byPH = 750-5 QH. It faces a horizontal demand curve in the US market at a price of 500. That is, itcan sell any number of panels in the US market at that price.a)b)c)d)market?How many panels will the firm sell in each market?What is the profit maximizing price of the panels it charges in the ChineseIs the price in the Chinese market higher or lower than in the US market? Willthis qualify as dumping?) Show the results diagrammatically.

A perfectly competitive market is where firms sell homogenous products, with free entry and exit,…

Answered: Question 2 Suppose that a Chinese solar…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter12: The Partial Equilibrium Competitive Model

Section: Chapter Questions

Problem 12.9P

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Attempt all questions. Q1. a) A local Pepsi company has total costs of production given by the equation TC-500+10q+Sq2. This implies that the firm's marginal cost is given by the equation MC 10+10q. The market demand for cold drink is given by the equation QD-105 (1/2)*P. Write the equations showing the company's average total cost and average variable cost and average fixed cost, each as a function of q. Show the firm's MC, ATC and AVC on one graph. What is the breakeven price and breakeven quantity for this firm in the short run? What is the shutdown price and shutdown quantity for this firm in the short run? If the market price of the output is $50, how many units will this firm produce? iv) Assuming the cold drink industry is perfectly competitive, what output would be produced by the firm in long-run equilibrium? What would be the long-run equilibrium price? i) ii)
2. You are the Southeastern Michigan regional manager at Coca-Cola, responsible forproduction and pricing in the Metro Detroit area. Your primary competitor is Pepsi. The marketresearch team at Coca-Cola is thinking about launching a new product, Orange Vanilla Coke, toboost the brand. The cost function to produce a 12-pack of 12 fl. oz. cans of Orange VanillaCoke is C(qcoke) = 0.25qcoke and the market research team has estimated inverse market demandfor a 12-pack of this new “pop” in Southeastern Michigan to be P = 10.25 – 0.00025Q. a. Assuming Pepsi decides not to produce a similar product, allowing Coca-Cola to maintainmonopoly power in the market for orange vanilla cola, what price and quantity will youchoose to maximize profit? How much profit does Coca-Cola earn?b. What price and quantity you would choose to maximize profit if Pepsi spies discover yourproduct before launch, allowing Pepsi to produce and launch an identical product at the sametime. For your answer, assume the cost…
A local company is planning to manufacture and market a four-slice toaster. For this toaster, the research department’s estimates are aweekly demand of 300 toasters at a price of $25 per toaster and a weekly demand of 400 toasters at a price of $20. The financial department’s estimates are fixed weekly costs of$5,000 and variable costs of $5 per toaster. a) Assume that the relationship between price ? and demand ? is linear. Use the research department’s estimates to express ? as a function of ? and determine the domain of the function. b) Using your knowledge from Finite Math, determine the Revenue function in terms of ?. c) Determine the Marginal Revenue at 2 different production levels for example 250 and 500 units. Interpret these results. (HINT: Consider what a positive or negative first derivative implies) d) Assume that the cost function is linear. Use the financial department’s estimates to express the cost function interms of ?. e) Determinethe Marginal costand interpret the…
A local newspaper currently has 84,000 subscribers at a quarterly charge of $30.Market research has suggested that if the owners raise the price to $32, they wouldlose 5,000 subscribers. Assuming that subscriptions are linearly related to theprice, what price should the newspaper charge for a quarterly subscription tomaximize their revenue?a) Find the cost function (Hint: find slope and use point-slope form to find thecost function) b) Find the revenue function c) Find the maximum revenue d) Find the profit function
The figure deplcts the demand curve for Beautiful Cars, and the marginal cost and Isoprofit curves of the car manufacturer. The quantity and price at polnt E are (Q*. P*) - (30, 5,500). Suppose now that the firm Increases the price to 5,550 and chooses the corresponding level of output from the demand function at the new price. Based on this Information, whlch of the following Is correct? 8,000 Demand curve 100 Quantity of cars, O O The firm will sell 30 cars at the higher price. O The firm's profit remains the same. O The quantity of cars produced reduced. O Tho firm's profit is now incroasod Price, Marginal cost ($)
16:04 Fri 7 May 16% O a Ims.gimpa.edu.gh Suppose that the demand functions facing a multi- product firm are as follows: Q, = 40 – 2P, + P2 Q, = 15 + P, - P2 1 The cost function of the firm is given by C = Q², + Q,Q, + Q²2 %D How much should the firm produce for each product, in order to maximize profits? How much profit is obtained? MAGEMENT AND
The inverse Demand equation is: P = 1018 - 1.5 Q The marginal cost is given as: MC = 212 + 1.5 Q if the market is served by many competitive firms, the equilibrium Q is and P is f needed, round to two decimals for both Pand Q (P in $/s unit, Q in units/period). a. 268.67: 615.00 O b.282.81 : 676.50 Oc 410.00 : 1421.00 O d. 179.11: 749.33 O e. None of the asnwers offered are accurate.
(b) You are the CEO for a lightweight compasses manufacturer. The demand function for the lightweight compasses is given by p = 40−4q2where q is the number of lightweight compasses produced in millions. It costs the company $15 to make a lightweight compass. (i) Write an equation giving profit as a function of the number of lightweight compasses produced. (ii) At the moment the company produces 2 million lightweight compasses and makes a profit of $18,000,000, but you would like to reduce production. What smaller number of lightweight compasses could the company produce to yield the same profit?
Suppose that a perfectly competitive firm faces a market price of $7 per unit, and at this price the upward-sloping portion of the firm's marginal cost curve crosses its marginal revenue curveat an outpuut level of 1,400 units. If the firsm produces 1,400 units, it's average variable costs equal $6.50 per unit, and its average fixed costs equal $0.80 per unit. What is the firm's maximizing (or loss-minimizing output level? What is the amount of it's economic profits (or losses) at this output level?
(b) You are the CEO for a lightweight compasses manufacturer. The demand function for the lightweight compasses is given by p = 40 – 4q²where q is the number of lightweight compasses produced in millions. It costs the company $15 to make a lightweight compass. (i) Write an equation giving profit as a function of the number of lightweight compasses produced. (ii) At the moment the company produces 2 million lightweight compasses and makes a profit of $18,000,000, but you would like to reduce production. What smaller number of lightweight compasses could the company produce to yield the same profit? Problem з
onsider the table below and assume the market price is $35 per unit. Totalproduct Totalfixed cost TotalVariablecost 0 150 0 1 150 50 2 150 75 3 150 112.4 4 150 150 5 150 200 6 150 270 7 150 360 8 150 475 9 150 620 10 150 800 Now assume there are 600 identical firms in this industry, that is, there are 600 firms, each of which has the same cost data as the single firm discussed above. Suppose, too, that the demand curve for this industry is as follows: Price Quantitydemanded $20 6,800 30 5,975 45 5,500 60 5,125 75 4,500 95 4,200 120 3,600 150 2,400 In equilibrium each firm will realize: Multiple Choice an economic profit of $155. a loss of $45. an economic profit of $35. a loss of $135.
For many decades, the Royal Mail had a legal monopoly in the U.K. Companies in thepostal business have increasing returns to scale, then constant returns to scale, andthen decreasing returns to scale. The Royal Mail’s minimum average cost is £2 at 100million deliveries and its minimum marginal cost is £1 at 75 million deliveries.The demand for postage is zero at a price of £10, and demand is 300 milliondeliveries at a price of £0. Marginal revenue is zero at a price of £10 and 150 at aprice of £0.Note: Unless otherwise stated, the numerical answers in this question do not need tobe exact but should correspond to how you have drawn your graph. (a) Draw a large graph showing the Royal Mail’s average cost curve and itsmarginal cost curve. Show how many deliveries would be made, and at whatprice, if Royal Mail operated as a monopoly. Show the Royal Mail’s profit orloss on the graph.

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