1) If a monopolist's price as a function of quantity can be expressed as P= 100 - Q, and the firms' cost curve is 10 +5Q, what is the profit maximizing solution?
2) A monopoly's demand function is P = 120 - Q,; TR= 120Q - Q2 and; MR = 120 - 2Q . If MC is constant at 10 what would be the deadweight loss if the firm charges its profit maximizing price
3) Bowen is a manufacturer of golf carts in Minneapolis servicing Minnesota and several nearby states. Over the past several years, a number of other golf cart companies have established operations in Bowen's market area, putting severe pressure on prices. Accordingly, Bowen is contemplating construction of a new production facility capable of producing up to 4000 golf carts/year. Engineering cost estimates for the new production facility indicate that
TC = $4200 + 980Q +.003Q2 and
MC = 980 + .006Q
A) Calculate the minimum efficient scale of production for each manufacturer in this industry.
B) If market demand in Bowen's market area of operations is for 8000 carts/year,and if the market is competitive, how many efficiently sized competitors are likely to emerge?