1) The Fox Company has market power (faces a downward-sloping demand curve). The industry's total cost is...
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Question:
1) The Fox Company has market power (faces a downward-sloping demand curve). The industry's total cost is
C= 30Q +1.5Q^2 and its inverse demand is P = 300 - 3Q.
What is the firm's profit-maximizing output and price?
If the firm's inverse demand changes to P = 240 - 2Q and its total costs remain unchanged, what is the firm's profit-maximizing level of output and price? State how this compares to the answer for the first bullet point.
Sketch a diagram to show the outcomes for the above bullet points. Holding marginal cost equal, how does the shape of the demand curve impact the ability of the firm to charge a higher price?
Related Book For
Managerial economics
ISBN: 978-1118041581
7th edition
Authors: william f. samuelson stephen g. marks
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