Problem Set 6

# Problem Set 6 - Problem set 6 Due Wednesday April 15th...

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Problem set 6 Due: Wednesday April 15th Please write as neatly as possible and clearly indicate each final answer by circling or double underlining (this is not necessary for graphs). Chapter 11 Questions: 1. A monopolist operates with the following data on cost and demand. It has a total fixed cost of 1400 and a total variable cost of g G , where Q is the number of units of output it produced. The firm’s demand curve is ± = 120 − 2g The size of its sunk costs is 600. The firm expects the condition of demand and cost to continue in the foreseeable future. a. What is the firm’s profit if it operates and it maximized profit? b. Should the firm continue to operate in the short-run, or should it shut down? Explain how you reached this decision. 2. Assume that a monopolist sells a product with a total cost function ²³ = 1200 + ´ µ G . The market demand curve is given by the equation ± = 300 − g . a.

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## This note was uploaded on 05/09/2009 for the course ECON 410 taught by Professor Codrin during the Spring '07 term at UNC.

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Problem Set 6 - Problem set 6 Due Wednesday April 15th...

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