1. A firm has the following demand plans and short-term costs for a particular product. Q = 200 -5p TC = 400 + 4Q
a. What price should the company sell their product?
b. If this is a monopolistically competitive firm, what do you think will happen in the long term? Explain
c. Suppose that in the long term demand shifted to Q = 100 - 5P. What should the company do? Explain
2. An oligopolistic, the Bramwell Corporation has estimated its demand function and total cost functions to be as follows: Q = 25 - 0.05P TC = 700 + 200Q Answer the following questions either by developing demand and cost schedules, using quantities from 1 to 14, but preferably by algebraically solving the equations.
a. What will be the price and quantity if Bramwell wants to?
1) Maximize profit?
2) Maximize revenue?
3) Determine the maximum revenue, but requires a minimum income of $300.
b. Now suppose that the cost function is TC = 780 + 200Q function while demand remains the same. What price and quantity will be if Bramwell want to?
1. Maximize profits
2. Maximize revenue
3. Maximize income, but requires a minimum income of $300?
c. Why the answers are the same in a1) and b1) but different in a3) and b3)?