ECON501HW5 - Economics 501.01 Microeconomic Theory...

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Economics 501.01 Microeconomic Theory Professor Patricia Reagan Autumn 2007 DUE TUESDAY NOVEMBER 20 HOMEWORK #5 1. Suppose that an industry is characterized as follows: 2 2 100 q C + = each firm’s total cost function q MC 4 = firm’s marginal cost function Q P 2 90 - = industry demand curve Q MR 4 90 - = industry marginal revenue curve a. If there is only one firm in the industry, find the monopoly price, quantity, and level of profit. b. Find the price, quantity, and level of profit if the industry is competitive. 2. Suppose a profit-maximizing monopolist is producing 800 units of output and is charging a price of $40 per unit. a. If the elasticity of demand for the product is -2, find the marginal cost of the last unit produced. b. What is the firm’s percentage markup of price over marginal cost? c. Suppose that the average cost of the last unit produced is $15 and the firm’s fixed cost is $2000. Find the firm’s profit. 3.
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This note was uploaded on 07/17/2008 for the course ECON 501.01 taught by Professor Reagan during the Fall '07 term at Ohio State.

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ECON501HW5 - Economics 501.01 Microeconomic Theory...

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