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8. The Public Service Company of the Southwest is regulated by an elected state
utility commission. The firm has total assets of $500,000. The demand function
for its services has been estimated as
P = $250 − $0.15Q
The firm faces the following total cost function:
TC = $25,000 + $10Q
(The total cost function does not include the firm’s cost of capital.)
a. In an unregulated environment, what price would this firm charge, what
output would be produced, what would total profits be, and what rate of
return would the firm earn on its asset base?
b. The firm has proposed charging a price of $100 for each unit of output. If
this price is charged, what will be the total profits and the rate of return
earned on the firm’s asset base?
c. The commission has ordered the firm to charge a price that will provide the
firm with no more than a 10 percent return on its assets. What price should
the firm charge, what output will be produced, and what dollar level of
profits will be earned?
utility commission. The firm has total assets of $500,000. The demand function
for its services has been estimated as
P = $250 − $0.15Q
The firm faces the following total cost function:
TC = $25,000 + $10Q
(The total cost function does not include the firm’s cost of capital.)
a. In an unregulated environment, what price would this firm charge, what
output would be produced, what would total profits be, and what rate of
return would the firm earn on its asset base?
b. The firm has proposed charging a price of $100 for each unit of output. If
this price is charged, what will be the total profits and the rate of return
earned on the firm’s asset base?
c. The commission has ordered the firm to charge a price that will provide the
firm with no more than a 10 percent return on its assets. What price should
the firm charge, what output will be produced, and what dollar level of
profits will be earned?
Unique Creations holds a monopoly position in the production and sale of magnometers.
The cost function facing Unique is estimated to be
TC = $100,000 + 20Q
a. What is the marginal cost for Unique?
b. If the price elasticity of demand for Unique is currently –1.5, what price
should Unique charge?
c. What is the marginal revenue at the price computed in Part (b)?
d. If a competitor develops a substitute for the magnometer and the price
elasticity increases to –3.0, what price should Unique charge?
The cost function facing Unique is estimated to be
TC = $100,000 + 20Q
a. What is the marginal cost for Unique?
b. If the price elasticity of demand for Unique is currently –1.5, what price
should Unique charge?
c. What is the marginal revenue at the price computed in Part (b)?
d. If a competitor develops a substitute for the magnometer and the price
elasticity increases to –3.0, what price should Unique charge?
A firm produces two products, milk and cheese Q1 and Q2 represent the output rates for milk and cheese, respectively. The profit function is π= -50 + 10Q1 + 20Q2 - Q1'2 - 2Q2'2 - 2Q1Q2
Determine the output rate for each product that will maximise profit
Determine the output rate for each product that will maximise profit
A community in Northern Namibia produces only two goods, TVs and CDs. With the aid of properly labelled production possibilities curves illustrate each of the following (putting TVs on the vertical axis).
1.A shift in production from CDs (services) towards TVs (goods).
2.An increase in the potential output of the community due to a greater availability of the factors of production.
1.A shift in production from CDs (services) towards TVs (goods).
2.An increase in the potential output of the community due to a greater availability of the factors of production.
Economics
explain using properly labelled diagrams, why a perfectly competitive firm will earn only normal profit in the long-run.
why a perfectly competitive firm will earn only normal profit in the long-run
Ab limited is a sole manufacturer and supplier of a solar panels in the country. As a result of this the CEO claimed in a recent meeting that he can set any price as he wishes and sell as many units of his products as he wants at that price. Is this correct.?motivate your answer
Economics
explain using properly labelled diagrams, why a perfectly competitive firm will earn only normal profit in the long-run.
Economics
Explain using a properly diagrams, why a perfectly competitive firm will earn only normal profit in a long-run
Economics
Using a well labelled diagrams, explain how the equlibrium quantity of apples will change as a result of the following;
2.2.1 A change in the wage of farm workers from R120 to R200 per day
2.2.1 A decrease in price of a fertilizers and a concurrent increase in the demand for apple juice.
2.2.1 A change in the wage of farm workers from R120 to R200 per day
2.2.1 A decrease in price of a fertilizers and a concurrent increase in the demand for apple juice.
