Assume a firm faces a demand curve equal to Qp = 1,200-4P where P is the...

 

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Assume a firm faces a demand curve equal to Qp = 1,200-4P where P is the price per unit and Qo is the number of units. The firm has a variable cost equal to $15 per unit produced, which is also the marginal cost for each unit for the firm. (2 points each) a) Assume the firm is a monopolist. Solve for the Marginal Revenue curve and the optimal quantity. b) Assume the firm is a monopolist. Solve for the optimal price and the resulting highest profit level for the firm if the fixed cost is $60,000. c) Graph the demand, marginal revenue, and marginal cost curves. Label each curve as well as each axis. d) Suppose the firm was legally obligated to set a price equal to marginal cost. Calculate the number of units that would be produced and the price that would be charge. f) Assume you are in favor of government regulating the firm's pricing if they are a monopolist. Calculate how much would the government need to subsidize the firm for the firm to stay in business and are legally obligated to set a price equal to marginal cost. Assume a firm faces a demand curve equal to Qp = 1,200-4P where P is the price per unit and Qo is the number of units. The firm has a variable cost equal to $15 per unit produced, which is also the marginal cost for each unit for the firm. (2 points each) a) Assume the firm is a monopolist. Solve for the Marginal Revenue curve and the optimal quantity. b) Assume the firm is a monopolist. Solve for the optimal price and the resulting highest profit level for the firm if the fixed cost is $60,000. c) Graph the demand, marginal revenue, and marginal cost curves. Label each curve as well as each axis. d) Suppose the firm was legally obligated to set a price equal to marginal cost. Calculate the number of units that would be produced and the price that would be charge. f) Assume you are in favor of government regulating the firm's pricing if they are a monopolist. Calculate how much would the government need to subsidize the firm for the firm to stay in business and are legally obligated to set a price equal to marginal cost.

Answer rating: 100% (QA)

a Marginal Revenue QDP 1200 4PP 1200P 4P2 Optimal Quantity Q 600 b Optimal Price P 300 Highest Profi... View the full answer