Suppose that the inverse demand function for a firm’s product is 𝑝 = 22 − 1/250 q and its long-run cost is 𝐶 = 12𝑞.
a. Does this firm have market power? Explain.
b. Solve for the marginal revenue function.
c. At what quantity and price is revenue maximized?
i. What is the price elasticity of demand?
ii. What is the profit?
d. At what quantity and price is profit maximized?
i. What is the price elasticity of demand?
ii. What is the profit?
iii. What is the deadweight loss?
e. What would be the price and quantity if this was a perfectly competitive market?
i. What is the deadweight loss?
8 сен 2024