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Econ 300 Homework #9

In: Business and Management

Submitted By wilde121
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Economics 300
Homework #9
Name _______________________ Due ______________
Part 1 - Complete the Following Chapter Problems: Attach any extra pages to this cover sheet. Chapter 9: Discussion Questions: 2, 4, 5, 9, 10 Problems: 1, 3, 4, 12, 14, 15 Spreadsheet Problems: 1 Appendix Problems: 2

Part 2 – Additional Problems: Attach any extra pages or printouts to this cover sheet.

1. A consultant estimates that the demand for the output of Marston Chemical is represented by the equation Q = 2,000 – 50P. A. If the managers of Marston decide to maximize total revenue instead of profit, at would output rate should the firm operate? What is the revenue-maximizing price?

B. Will the revenue-maximizing output rate be greater than or less than the profit-maximizing rate? Explain.

2. The manager of Biswas Glass Company estimates that total revenue from the sale of her firm’s product is given by the equation TR = 300Q – .5Q2. The total cost equation is estimated to be TC = 5,000 + 60Q + Q2. A. What is the profit maximizing price and output rate? What is the amount of economic profit?

B. At what output rate is average cost at a minimum? At this output rate, what is the amount of economic profit?

3. Lyon Concrete is a monopoly supplier of concrete in northern Arkansas. Demand for the firm’s concrete is given as P = 110 – 4Q. Marginal cost is constant and equal to 10. A. What are the profit maximizing price and output?

B. What is the deadweight loss resulting from Lyon’s monopoly?

C. Compared to pricing at marginal cost, how much income is redistributed from consumers to the owners of the monopoly?

Discussion Questions 2. a) If a firm that is incurring losses at the best level of output it should continue to produce in the…...

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