Consider a market with demand given by Q = 30p-2. A firm has a constant MC...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Consider a market with demand given by Q = 30p-2. A firm has a constant MC = 5 with no fixed costs. Use the Lerner Index rule to answer the following questions. a) (10 points) Suppose the government grants this firm an exclusive monopoly in this market. Find the price- cost margin (the mark-up) and the profit maximizing price. b) (10 points) Suppose that, in addition to the firm's output, the government also produces Qc 5p, %3D where p is the price charged by the firm. Obtain the firm's residual demand (very easy) and show that the presence of the government in the market does not change neither the market price nor the market quantity. How is the market split between the firm and the government (what is the market share of each one)? Consider a market with demand given by Q = 30p-2. A firm has a constant MC = 5 with no fixed costs. Use the Lerner Index rule to answer the following questions. a) (10 points) Suppose the government grants this firm an exclusive monopoly in this market. Find the price- cost margin (the mark-up) and the profit maximizing price. b) (10 points) Suppose that, in addition to the firm's output, the government also produces Qc 5p, %3D where p is the price charged by the firm. Obtain the firm's residual demand (very easy) and show that the presence of the government in the market does not change neither the market price nor the market quantity. How is the market split between the firm and the government (what is the market share of each one)?
Expert Answer:
Answer rating: 100% (QA)
Here demand is given by Q 30p 2 30P2 Marginal Cost is gi... View the full answer
Related Book For
College Algebra
ISBN: 978-0134697024
12th edition
Authors: Margaret L. Lial, John Hornsby, David I. Schneider, Callie Daniels
Posted Date:
Students also viewed these economics questions
-
Suppose that in addition to repairing your car, you can also spend money advertising. The benefit of H hours of repair work is: BR (H) = 220 H - H2. while the benefit of D dollars of advertising is:...
-
Suppose that in addition to investing in one more stock you can invest in T-bills as well. Would you change your answers to Problems 17 and 18 if the T-bill rate is 8%? The correlation coefficients...
-
Suppose that in addition to investing in one more stock you can invest in T-bills as well. Would you change your answers to problems 17 and 18 if the T-bill rate is 8 percent?
-
In Exercises 7-9, find the indicated measure. The area of a circle is 380 square inches. Find the radius.
-
A computer analysis of 30 pairs of observations results in the least-squares regression equation = 14.0 + 5.0x, and the standard deviation of the slope is listed as sb1 = 2.25. a. At the 0.05 level...
-
Restore the file Boston Catering create the following reports for the period 7/1/10 through 8/31/10 (unless otherwise specified) in a manner similar to that used in the chapter. a. Sales by customer...
-
Journalize the following adjusting entries at December 31: 1. Services provided but not recorded, $1,500. 2. Salaries earned by employees but not recorded, $2,300. 3. Accrued interest on a note...
-
Ogwood Companys Johnstown Division is a small manufacturer of wooden household items. Al Rivkin, division controller, plans to implement a standard-costing system. Rivkin has collected information...
-
As an analyst, would you recommend to the firm's management that they issue new debt? If yes, how much and at what coupon rate? At that level, how many shares will they purchase?
-
Implied Volatility. Replicate the Implied Volatility Smile Figure on Page 12 of LN3, using current Call options data on the S&P500 (SPX) maturing on January 20, 2023. Please state the assumptions you...
-
-5 -14 2 Consider the symmetric matrix A = -14 4 -16 2 -16 10 (a) Check that the following are eigenvectors for A, determining the eigenvalue for each (all eigenvalues are integers): V = , V = V3 = 2...
-
What does it mean to take a long-term perspective with respect to structuring a deal?
-
What kind of investors want to get actively involved with their companies, and why?
-
With what business aspects are investors most likely to get involved?
-
What affects the success of raising a VC fund?
-
What is the effect on performance of replacing a company founder with an outside CEO?
-
How do unmodified opinions and qualified opinions expressed in the auditor's report differ from one another?
-
d. The characteristic equation of a control system is given by s+2s+8s+12s+20s+16+16=0. Determine the number of the roots of the equation which lie on the imaginary axis of s-plane
-
Solve the nonlinear system of equations. Give all solutions, including those with nonreal complex components. xy = 8 3x + 2y = -16
-
One refrigerator sells for $700 and uses $85 worth of electricity per year. A second refrigerator is $100 more expensive but costs only $25 per year to run. Assuming that there are no repair costs,...
-
Graph the solution set of the system of inequalities. y > x 3 + 1 y -1
-
Jasmine Minoza, the chief information officer of a Canada- based designer of video games, Adventure Gaming, Inc. (AGI), is considering outsourcing her companys software development activities to...
-
Rosa Dominguez, the owner of Elegant Dining in San Jose, California, is pondering whether to buy electronic menu technology and tablets for her five-star restaurant. Prices for a typical four course...
-
Identify a company that integrates goods and services similar to the LensCrafters example. Use the framework in Exhibit 5.1 to write a short case study about the company in a similar fashion as the...
Study smarter with the SolutionInn App