ps_10 - Problem Set #10 (due Friday April 10) Ec 201...

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(due Friday April 10) Ec 201 Spring, 2009 Michigan State University L. Martin 1. Monopoly. Buist Metal Sheeting remains the only manufacturer of the once stylish half -round gutters. Still, many people who have this type of gutters prefer to replace the existing style even if it means dealing with a monopolist. for its half-round gutter business, and its marginal costs are $8 per foot. Fixed costs are $25,000. Demand is given below. price quantity (feet) revenues marginal revenue $20 10,000 $18 12,000 $16 14,000 $14 16,000 $12 18,000 $10 20,000 a. Calculate marginal revenue and enter in the table. b. Compute the profit maximizing quantity and price. c. Suppose that Mrs. Buist (the irrascible owner) falls out of favor with the City Council, which imposes a price ceiling of $12 per foot. How many feet will Buist choose to sell? d. Suppose, alternatively, that there is no price ceiling and that the company is subsidized $4 per foot. How many feet will it choose to sell? At what price. e.
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ps_10 - Problem Set #10 (due Friday April 10) Ec 201...

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