Only answer #5 please Answer to #4: Profit is maximised where MR=MC Q=80-4P. P=2

Question

Only answer #5 please

Answer to #4:

Profit is maximised where MR=MC

Q=80-4P. P=20-0.25Q.

MR=dTR/dQ=20-0.5Q and MC=6

MR=MC then 20-0.5Q=6

14=0.5Q

Q=28 and P=20-7=13

Profit=PQ-TC=13*28-6*28-5=191

tariffs can be a way to incentivize companies to build factories in the respective countries they sell in. This can work if the demand in that country is big enough to cover the cost of building a plant or factory there (e.g. in the U.S. or China) but might not in smaller countries. To see this, let's look at an example Suppose for simplicity that Apple has a worldwide monopoly on smartphones. Suppose demand in the U.S. is Q-80-4P. Assume that it can produce at constant marginal cost MC = 6 and has a fixed cost of production of F-5. 4. Apple is a monopolist, so set MR and MC equal and solve for Apple's quantity and price. Find Apple's profit from selling in the United States. 5. Now suppose the U.S. imposes a tariff 4 and Apple initially only produces in China, ie, it has to pay the tariff and its costs increase to MCnew-10. Show how this affects Apple's U.S. profits.

Explanation / Answer

5) P = 20-0.25Q

TR = 20Q - 0.25Q2

MR = 20-0.5Q

Now our MC increases to = 10

profit maximizng output , MR=MC
20-0.5Q = 10

10 = 0.5Q or Q = 20

P = 20-0.25*20  

P = 20-5 = $15

so profit maximizing quantity is 20 and price is $15 after impose an tariff.

profit = PQ -TC = (20*15 ) - (20*10 ) +( 5) )

profit = 300 - 205 = $95

so, impose an tariff, the profit has been reduced.

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