Question

(a) A firm has a total cost function C(Q) = 100 + 40 + 202 and demand function is 04 = 100 - 3p X Required: (i) Determine the firm's marginal cost when Q =4 (ii) Find the own price elasticity of demand. (iii) Consider the marginal cost in () calculate the Lerner index. (iv) By what factors does this firm mark up its price over marginal cost? (b) You manage a company that operates in a market that competes aggressively in prices. Due to the high fixed cost of obtaining the technology associated with entering this market only a limited number of other firms exist. Furthermore, over 70 percent of the product sold in this market are protected by patents for the next eight years. Does this industry conform to an economist's definition of a perfectly competitive market? A monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer's demand for the product is Q4 = 80 - 0.5P, and the marginal cost of production is RM100. @ Determine the optimal number of units to put in a package. (in How much should the firm charge for this package