A monopolistically competitive firm in the long run: Select one: a. May make a positive or negative profit. b. Earns positive economic profit. c. Earns zero economic profit. d. Makes a loss. If you are given the following total cost function and the demand equation as follows: TC = 40 + 50Q + 5Q^2 P = 170 - 5Q where P is the price level, Q is the quantity sold, and TC is the total cost. The price level that maximizes profit in the above model is: (don't forget to equalize MC=MR to solve it) a. $140 b. $50 c. $110 d. $170.
Added by Nicholas B.
Step 1
A monopolistic competitive firm in the long run earns zero economic profit because there are no barriers to entry and exit, so new firms can enter the market and compete away any positive economic profit. For the second question, we need to find the price level Show more…
Show all steps
Your feedback will help us improve your experience
Crystal Wang and 58 other Microeconomics educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Key Concepts
Recommended Videos
Consider a perfectly competitive market. Assume that market demand is P=100 - QD and market supply is P=0.5Qs. Denoting the firm level quantity by q, assume TC=5q+2q2+q3 so that MC=5+4q+3q2. In the short run, there are 50 firms in the market, find the market equilibrium price and quantity. Find the short run profit for a typical firm. b) Find the long run (free entry and exit) equilibrium price and the number of firms.
Crystal W.
A monopolist faces the price equation: P = 1,000 - 0.5Q and total cost: C = 50,000 + 100Q + 0.4Q^2. A. Determine the price and output that maximize total revenue, and the level of profit. B. Determine the price and output that maximize profit and the level of profit. C. Compare the goals of revenue-maximization versus profit-maximization, and comment on the appropriate goal of the firm.
Oluwadamilola A.
"Suppose that demand for a product is P=55-5Q and total cost of production is 5Q+20. What is the profit maximising price? a. 30 b. 45 c. 35 d. 40 Consider a monopolist with demand curve P= 100-Q/2 . The total cost of production is 10Q + 1500 for positive ouput and 500 if it shuts down production. What is the maximum profit the monopolist can earn (assuming no possibility of price discrimination)? a. 255,000 b. 25,500 c. 2,550 d. 255 If the demand curve for a monopolist's output is given by the function P = 25 - Q/10, what is its marginal revenue at Q = 5? a. 24 b. 25 c. 23.5 d. 24.5
Andrew D.
Recommended Textbooks
Principles of Economics
Principles of Microeconomics for AP® Courses
Economics
Transcript
Watch the video solution with this free unlock.
EMAIL
PASSWORD