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a. A monopolist producing and selling cooking gas faces a demand curve,
Q = 100 – 0.2P. If Total Cost is TC=4000+ 50Q.
i. Determine the quantity of cooking gas she will produce and the price she will charge to maximize profits and determine her profit.
ii. Explain how her profits she will affected if regulators forced her to operate like a perfectly competitive firm.
iii. Illustrate and compute dead-weight loss and lost consumer surplus associated with her Monopoly operations.
a. Suppose the joint cost function of a firm producing two products X and Y IS given by C = 250X2 + 120Y2. Assuming that output of the two products is restricted at 1369.
i. Using Lagrangian multiplier technique find the amounts of X and Y that will minimize cost and compute this cost.
ii. Examine the cost implications of changing this optimal combination so as to produce 236 additional units of X and 236 fewer units of Y.
a. Suppose you are a manager of a County government project that is meant to provide rent-regulated housing units in low-income settlements. Using your knowledge of equilibrium, advice the Governor whether this policy will be a success.
4. Kristen and Anna live in the beach town of Santa Monica. They own a small business in which they make wristbands and pot holders and sell them to people on the beach. As shown in the table on the following page, Kristen can make 15 wristbands per hour but only 3 pot holders. Anna is a bit slower and can make only 12 wristbands or 2 pot holders in an hour.
a. Suppose you are a manager of a County government project that is meant to provide rent-regulated housing units in low-income settlements. Using your knowledge of equilibrium, advice the Governor whether this policy will be a success.
b. A Monopolist producing and supplying cooking gas to Mombasa city faces the demand function.
Q = 8800 – 20P. Its cost function is given by TC = 20Q + 0.05Q2.
i. Determine the quantity of cooking gas she will produce and the price she will charge to maximize profits and determine her profit.
ii. Explain how her profits she will affected if regulators forced her to operate like a perfectly competitive firm.
iii. Illustrate and compute dead-weight loss and lost consumer surplus associated with her Monopoly operations.
Suppose the production function a firm producing Q requires the use of only labor and
capital. The production function for the product is given by: Q-1/4K3/4. The amount of capital used is fixed at 5 units. Then,
A. Determine MPL and APL function
B. Determine MP and AP function
C. Compute MRTSKL & MRTS LK
If this market has very elastic supply and very inelastic demand how would the burden of a text on rubber bands be shared between consumer and produces use the tool of consumer surplus and producer surplus in your answer
The Pear company sells a smart phone for $250. Its sales have averaged 8,000 units per month over the last year. Recently, its closest competitor Banana company reduced the price of its smart phone from $350 to $300. As a result, Pear’s sales declined by 1,500 units per month. (a) What is the cross price elasticity of demand between the Pear and Banana smart phone? Use the averaging formula. What does this indicate about the relationship between the two products? (b) If the Pear company knows that the price elasticity of demand for its phone is -1.5, what price would the Pear company have to charge to sell the same number of units as it did before the Banana company price cut? Assume that Banana company holds its price of its phone constant at $300. Use the averaging formula.
if a duopolist has a linear demand curve of the form Q=400-P.Assuming each firm has total cost (TC=3000+100Q).Calculate the profit maximizing price quantity combinations using the following oligopoly pricing models listed below demonstrating that
a)Under the cournot model,both firms will earn the same level of profit and determine industry profit and explain why this should be the case.
b)Under the cartel model each firm earns a higher profit that under cournot
c)Under the quasi competitive model,the firm will make a loss equivalent to fixed cost
d)Under the stackelberg's model, the leader will earn morethan twice the profit of the follower and that the total industry profits will be lower than under both cournot and cartel models. Explain why this would be the case
Given below are the demand and the supply functions for three interdependent commodities.
Qd1=110 - 4P1+ 3P2 -4P3;Qs1= 2P1 -20
Qd2= 46+ 2P1 -4P2+4P3; Qs2= -14+ 2P2
Qd3= 20 -P1 + 4P2 - 2P3 ;Qs3=2P3 -10
Determine the equilibrium prices and quantities for the three commodity market model. Then compute the prices and cross elasticities of demand for all the three markets and interprete their coefficients
if a duopolist has a linear demand curve of the form Q=400-P.Assuming each firm has total cost (TC=3000+100Q).Calculate the profit maximizing price quantity combinations using the following oligopoly pricing models listed below demonstrating that
a)Under the cournot model,both firms will earn the same level of profit and determine industry profit and explain why this should be the case.
b)Under the cartel model each firm earns a higher profit that under cournot
c)Under the quasi competitive model,the firm will make a loss equivalent to fixed cost
