Suppose an industry is monopolized, and the demand for the product sold by the firm is given by: Q=400-2p.?
The answer is price less than $100, because the demand would be inelastic. If price is $100, the elasticity is 1, or-2 x 100/200.
In a perfectly competitive industry?
One of the main points in perfect competition is that each firm must take the price the market determines. Each firms is a price taker.
Monopolistic Competition demand curve?
Because of competition - many producers-participants in the market supply services/goods above profit-maximizing quantity (and below prof/max price). so for competitive markets demand curves usually viewed at more elastic part (there of course may be inelastic segments but due to competition it usually far away from current position). In the longer-run other producers seeing that someone is making high profits will do all the best (in most cases) to enter the market, so consumers will be able to switch to substitutes - and demand curve will become more elastic.
A supply curve gives the relationship between price and the quantity supplied at each price. Usually its upwards sloping, i.e it has a positive relationship with the price of the commodity.Under perfect competition the firm is the price taker, i.e it supplies the quantity at the given price.The demand curve or the AR curve in a market is horizontal curve parallel to x-axis, where AR = MR = price. The profit maximising output in this case is the point where MC = P . The upwards sloping segment of the MC is the supply curve. But in case of monopoly, the firm can decide the price at which it wants to sell its goods. The monopoly maximising its profit at the point where MR = MC. There is no supply curve under monopoly because, there is no unique price-quantity relationship, since quantity supplied by a firm under monopoly is not determined by price but instead bymarginal revenue, given the marginal cost curve
Can you solve this problems related to microeconomics?
11.11) A monopolist faces a demand curve P = 210 - 4Q and initially faces a constant marginal cost MC= 10. a) Calculate the profit-maximizing monopoly quantity and compute the monopolist's total revenue at the optimal price. b) Suppose that the monopolist's marginal cost increases to MC = 20. Verify that the monopolist's total revenue goes down. c) Suppose that all firms in a perfectly competitive equilibrium had a constant marginal cost MC = 10. Find the long-run perfectly competitive industry price and quantity. d) Suppose that all firms' marginal costs increased to MC = 20. Verify that the increase in marginal cost causes total industry revenue to go up. 11.21) A monopolist producing only one product has 2 plants with the following marginal cost functions: MC1 = 20 + 2Q1 and MC2 = 10 + 5Q2, where MC1 and MC2 are the marginal costs in plants 1 and 2, and Q1 and Q2 are the levels of output in each plant, respectively. If the firm is maximizing profits and is producing Q2 = 4, what is Q1? 11.25) The demand curve for a certain good P = 100 -Q. The marginal cost for a monopolist MC(Q) = Q, for Q ≤ 30. The maximum that can be supplied in this market is Q = 30, that is, the marginal cost is infinite for Q > 30. a) What price will the profit-maximizing monopolist set? 12.11) Suppose that Acme Pharmaceutical Company discovers a drug that cures the common cold. Acme has plants in both the United States and Europe and can manufacture the drug on either continent at a marginal cost of 10. Assume there are no fixed costs. In Europe, the demand for the drug is QE = 70 – PE, where QE is the quantity demanded when the price in Europe is PE. In the United States, the demand for the drug is QU = 110 – PU, where Qu is the quantity demanded when the price in the United States is PU. a) If the firm can engage in third-degree price discrimination, what price should it set on each continent to maximize its profit? 13.4. Lets consider a market in which two firms compete as quantity setters, and the market demand curve is given by Q=4000-40P. Firm 1 has a constant marginal cost equal to MC1=20, while firm 2 has a constant marginal cost equal to MC2=40. a. find each firm’s reaction function b. find the cournot equilibrium quantities and price.
Firm Profit Maximization Questions - Please Help!?
Hi, I have a couple of questions regarding profit maximization for a competitive firm. 1. Suppose that there are 100 identical firms in a perfectly competitive industry. Each firm has a short-run total cost function of the form C(q) = 1/300q^3 + 0.2q^2 + 4q + 10 (a) Calculate the firm's short-run supply curve (as a function of market price p) (b) Calculate the short-run industry supply curve, Q^S(p) (c) Suppose that market demand is given by Q^D(p) = -200p +8000 What will be the short-run equilibrium price and quantity pair? 2. Suppose that the market demand for frisbees is given by Q^D(p) = 100 - 2p, and the market supply curve of frisbees is given by Q^S(p) = 20 + 6p. (a) What will be the equilibrium price and quantities of frisbees? (b) Suppose the government levies a tax of $4 per frisbee. Now what will be the equilibrium quantity sold, the price consumers will pay, and the price firms will receive? How is the burden of the tax shared by the buyers and sellers? (c) How would your answers to the parts (a) and (b) change if the supply curve were instead: Q^S(p) = 70 +p? What do you conclude by comparing these two cases?
You have to figure out who your target market is and what is the actual total addressable market to understand what is the likely market share of the category that you would be in.For example if I had a product that was targeted for small businesses and small businesses usually spend X dollars on that product what is the total addressable market size? What do you think you will be able to obtain in yr one versus yr two versus yr three? That is your market share.
Ok so goods with perfectly elastic demand are ones where demand goes down to zero with any increase in price no matter how small. It is an extreme case and real life examples are rare in such a scenario. Few approximations to such perfectly elastic demand which I could think of areVegetable/ Fruit Vendors located on a street. - So here all these vendors have to keep an almost same price to get the demand; if any of them would increase their price people would tend to move to another vendor. So such vendor faces a perfectly elastic demand curve.Currency Exchange Market - If someone is offering lower price for your currency (i.e a higher price to you) you would go to some other firm to sell off your currency. And the first one would lose its market share.I hope it helps :)