9. Frontier Inc. is the only producer of video games in Manbari Country. The market demand...

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9. Frontier Inc. is the only producer of video games in Manbari Country. The market demand for video games is given by P 40-20d, where P is the price per video game and Q is the number of video games purchased by consumers every day. Frontier Inc. has a cost function given by C(Q) = 4Q, and the associated average and marginal cost curves are given by AC(Q) = MC(Q)=4. (a) If Frontier Inc. wants to maximize its profit, what price should it charge? How many video games will be sold at this price? What will its profit be? (b) Determine the price elasticity of demand at the profit-maximizing output level. Is demand elastic at that point or not? (c) Suppose now the government imposes a five percent profit tax on Frontier Inc. What price will Frontier Inc. charge now to maximize its profit? Will this price be higher than, equal to, or lower than the price in (a)? Explain and justify your answer carefully. (d) Determine the net (after tax) profit of Frontier Inc. in equilibrium. 9. Frontier Inc. is the only producer of video games in Manbari Country. The market demand for video games is given by P 40-20d, where P is the price per video game and Q is the number of video games purchased by consumers every day. Frontier Inc. has a cost function given by C(Q) = 4Q, and the associated average and marginal cost curves are given by AC(Q) = MC(Q)=4. (a) If Frontier Inc. wants to maximize its profit, what price should it charge? How many video games will be sold at this price? What will its profit be? (b) Determine the price elasticity of demand at the profit-maximizing output level. Is demand elastic at that point or not? (c) Suppose now the government imposes a five percent profit tax on Frontier Inc. What price will Frontier Inc. charge now to maximize its profit? Will this price be higher than, equal to, or lower than the price in (a)? Explain and justify your answer carefully. (d) Determine the net (after tax) profit of Frontier Inc. in equilibrium.

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a Frontier Inc should charge 22 per video game sell 9 video games and its p... View the full answer