BusEcon_Exam3_SMP

# Suppose the short run total cost function for a

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5. Suppose the short-run total cost function for a perfectly competitive firm is TC = 3000+300 Q -5 Q 2 + .05 Q 3 . The shut-down price is: a. 150 b. 175 c. 200 d. 225 e. none of the above. 6. You are the manager of a firm which sells its product in a perfectly competitive market at a price of \$250. Your firm's cost function is C =400+5 Q 2 . The profit-maximizing output for your firm in the short run is: 7. You are the manager of a monopoly that faces a demand curve described by p =10,000-50 Q . Your firm's cost function is: 1,000,000+4,000 Q . The profit-maximizing output and price, respectively, are: 8. Consider the following market demand: P =6 - .02 Q facing a monopoly. Suppose that the monopolistic firm's marginal cost is zero, then in maximizing profits, the following price will be charged and output will be produced, respectively: 2

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9. Suppose that while the market demand remains to be the same as in the previous question, there are now two identical firms, each facing zero marginal cost as before, whichcompete in a Cournot fashion, the following output will be produced by each duopolistic firm: Hint: the following formula may be useful: For a linear function of the form P=a-bQ and MC=0, the profit-maximizing Cournot solution for output to each duopolistic firm is given by a/ (3b). a. 50 units b. 75 units c. 100 units d. 125 units e. none of the above.
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