Suppose the industry demand curve for tennis rackets is: P = 100 -0.02Q. The industry supply...

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Suppose the industry demand curve for tennis rackets is: P = 100 -0.02Q. The industry supply curve is .03Q. The industry is perfectly competitive. The Serena Company is one of the competing firms in this industry. Its SRTC = 10,000+.075q², where q = the quantity of rackets produced by the company. The SRMC for this cost function is .15q. a. (1 point)) Derive the current market price and total quantity of tennis rackets sold in the marketplace. b. (5 points) Find Serena's profit maximizing level of output. c. (2 points) Should Serena produce tennis rackets or shut down for the period? Explain. d. (2 points) Is Serena making a positive Economic Profit in the short run? Explain. Suppose the industry demand curve for tennis rackets is: P = 100 -0.02Q. The industry supply curve is .03Q. The industry is perfectly competitive. The Serena Company is one of the competing firms in this industry. Its SRTC = 10,000+.075q², where q = the quantity of rackets produced by the company. The SRMC for this cost function is .15q. a. (1 point)) Derive the current market price and total quantity of tennis rackets sold in the marketplace. b. (5 points) Find Serena's profit maximizing level of output. c. (2 points) Should Serena produce tennis rackets or shut down for the period? Explain. d. (2 points) Is Serena making a positive Economic Profit in the short run? Explain.

Answer rating: 100% (QA)

a We must identify the equilibrium point where industry supply and industry demand are equal before we can estimate the market price and quantity Therefore we solve for Q by setting the industry suppl... View the full answer