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A small firm produces generic waterproof phone cases. It can sell all it is capable of producing at the market price of $15each. Its Monthly cost...

1a.  A small firm produces generic waterproof phone cases. It can sell all it is capable of producing at the market price of $15each. Its Monthly cost function is

TC=4500 + 0.2Q + 0.025Q²

        i.           Find the profit-maximizing monthly quantity

      ii.           Find the Monthly profit

    iii.           Should the firm continue to operate in the short run? Very briefly, why or why not?

 

1b. The firm now finds a way to distinguish their product. It now faces a demand of Q = 344 - 4P

If they charge one price to all customers,

i.                    Find the profit-maximizing monthly quantity

ii.                  Find the profit-maximizing price

iii.                Find the level of profits.

 

1c. The same firm can now employ first degree price discrimination perfectly.

i.                    Find the profit-maximizing monthly quantity

ii.                  Find the level of profits

Top Answer

1a) i.  profit-maximizing monthly quantity=296 ii.  Monthly profit=-2309.6(loss) 1b)... View the full answer

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