Econ hw 7

You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 78 −

15Q, where . The marginal costs associated with producing in the two plants are and

. How much output should be produced in plant 1 in order to maximize profits?

1

You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 78 −

15Q, where . The marginal costs associated with producing in the two plants are and

. What price should be charged in order to maximize revenues?

$39

You are the manager of a firm that sells its product in a competitive market at a price of $50. Your firm's cost

function is . The profit-maximizing output for your firm is

5

You are the manager of a firm that sells its product in a competitive market at a price of $50. Your firm's cost

function is . Your firm's maximum profits are

$85

You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 120 −

6Q, where . The marginal costs associated with producing in the two plants are and

. What price should be charged to maximize profits?

$66

You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 120 −

6Q, where . The marginal costs associated with producing in the two plants are and

. What price should be charged in order to maximize revenues?

$60

You are the manager of a firm that sells its product in a competitive market at a price of $40. Your firm's cost

function is . The profit-maximizing output for your firm is

5

You are the manager of a monopoly that faces a demand curve described by P = 63 − 5Q. Your costs are C = 10 +

3Q. The revenue-maximizing output is

6.3

Which of the following is an example of a monopoly?

local utility industry in a small town

Suppose that initially the price is $50 in a perfectly competitive market. Firms are making zero economic profits.

Then the market demand shrinks permanently, some firms leave the industry, and the industry returns to a long-run

equilibrium. What will be the new equilibrium price, assuming cost conditions in the industry remain constant?

$50

A monopoly has produced a product with a patent for the last few years. The patent is going to expire. What will

likely happen to the demand for the patent-holder's product when the patent runs out?

Demand will decline.

A monopoly has produced a product with a patent for the last few years. The patent is going to expire. What will

happen after the patent expires?

Some firms will enter the industry.

A firm can produce two products with the cost function . The firm

enjoys

cost complementarity and economies of scope.

You are the manager of a firm that produces output in two plants. The demand for your firm's product is P = 20 − Q,

where . The marginal costs associated with producing in the two plants are and

. How much output should be produced in plant 1 in order to maximize profits?

8

Suppose a monopolist knows the own price elasticity of demand for its product is −3 and that its marginal cost of

production is constant MC(Q) = 10. To maximize its profit, the monopoly price is

$15 per unit.

Consider a monopoly where the inverse demand for its product is given by P = 80 − 2Q. Total costs for this

monopolist are estimated to be . At the profit-maximizing combination of output and

price, deadweight loss is

$50.

3

Suppose perfectly competitive market conditions are characterized by the following inverse demand and inverse

supply functions, respectively: P = 200 − 2Q and P = 50 + 3Q. The demand curve facing an individual firm operating

in this market is

a horizontal line at $140.

Consider a monopoly where the inverse demand for its product is given by P = 300 − 2Q. Total costs for this

monopolist are estimated to be . At the profit-maximizing combination of output and price,

deadweight loss is

revision: 11_25_2025_QC_HETS-107900

$1,250.

Consider a monopoly where the inverse demand for its product is given by P = 300 − 2Q. Total costs for this

monopolist are estimated to be . At the profit-maximizing combination of output and price,

monopoly profit is

$7,400.