Answer question 1, A and b in detail. HW 5 Mono antitative.pdf Acrobat Reader Fi
ID: 1112642 • Letter: A
Question
Answer question 1, A and b in detail.
HW 5 Mono antitative.pdf Acrobat Reader File EditView Window Help Sign In Home Tools The Bank Panic of 1... HW 5 Monopoly M... HW 5 Monopoly Q… x 115% Export PDF ^ Home-work S: Due by 28th November 2017 Adobe Export PDF Convert PDF Files to Word or Excel Online Monopoly Select PDF File HW 5 Monopol...titative pd (10) Suppose the demand function of Protein-X powder is Qd-100-5P . Channel Islands Inc. (CI) has patented the product in their name and there is no substitute for it. Making CI the only supplier in the market. The total cost to produce the product is C 20 + 2Q + Q2 1. Convert to Microsoft Worddocx) v Find the Monopoly, Price, Quantity and Profit. If the government imposes a tax of $1 per unit calculate the Monopoly Price, Quantity and Profit. a. Document Language English (U.S) Change b. 2. (10) Suppose the demand function of coffee cups is as follows: Q60 -3P. iCup Inc. is the sole producer of such glasses and has a constant average cost of $10 per unit. Convert Create PDF Find the Monopoly price, quantity and profit. If the government imposes a tax of $2 for every 2 cups produced and says that iCup Inc has to pay tax on every two cups ( so they round off to the higher even number when an odd number of cups is produced). Calculate the Monopoly Price, Quantity and Profit. a. b. Store and share files in the Document Cloud Learn More 8:35 AM EEE] 4: 11/18/2017Explanation / Answer
(1)
Demand: Q = 100 - 5P
5P = 100 - Q
P = 20 - 0.2Q
Total cost: C = 20 + 2Q + Q2
Marginal cost (MC) = dC / dQ = 2 + 2Q
(a) Profit is maximized by equating Marginal revenue (MR) with MC.
Total revenue (TR) = P x Q = 20Q - 0.2Q2
MR = dTR / dQ = 20 - 0.4Q
Equating MR & MC,
20 - 0.4Q = 2 + 2Q
2.4Q = 18
Q = 7.5
P = 20 - (0.2 x 7.5) = 20 - 1.5 = 18.5
TR = 18.5 x 7.5 = 138.75
C = 20 + (2 x 7.5) + (7.5 x 7.5) = 20 + 15 + 56.25 = 91.25
Profit = TR - C = 138.75 - 91.25 = 47.5
(b) The $1 tax will effectively increase MC by $1 per unit and new MC becomes
MC = 2 + 2Q + 1 = 3 + 2Q
Equating (unchanged) MR with MC,
20 - 0.4Q = 3 + 2Q
2.4Q = 17
Q = 7.08
P = 20 - (0.2 x 7.08) = 20 - 1.42 = 18.58 (Price paid by buyers)
TR = 18.58 x 7.08 = 131.55
C = 20 + (2 x 7.08) + (7.08 x 7.08) = 20 + 14.16 + 50.13 = 84.29
Profit = 131.55 - 84.29 = 47.26