ProblemsEcon501 - 10 .Thecompany'soperations . P=1,000.2Q...

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10.  Zar Island Gas Company is the sole producer of natural gas in the remote island country of Zar. The company's operations  are regulated by the State Energy Commission. The demand function for gas in Zar has been estimated as: P = 1,000 - .2Q where Q is output (measured in units) and P is price (measured in dollars per unit). Zar Island's cost function is: TC = 300,000 + 10Q This total cost function does not  include a "normal" return on the firm's invested capital of $4 million.   In the absence of any government price regulation, determine Zar Island's optimal output  level (Points : 5)         1237 units        2475 units        4950 units       A monopolist has no optimal level of output 11.  In the absence of any government price regulation, determine Zar Island's optimal  selling price (Points : 5)         $1010/unit       
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This note was uploaded on 07/29/2011 for the course ECON 501 taught by Professor Kline during the Spring '11 term at University of Central Florida.

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ProblemsEcon501 - 10 .Thecompany'soperations . P=1,000.2Q...

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