You are given the following data for your firm, which sells high-capacity video

Question

You are given the following data for your firm, which sells high-capacity video MP3 players.
Q P TC 0 $1,000 $1,500 2 $960 $2,568 4 $920 $3,660 6 $880 $4,824 8 $840 $6,108 10 $800 $7,560 12 $760 $9,228 14 $720 $11,160 16 $680 $13,404 18 $640 $16,008 20 $600 $19,020
Question 1
Which of the following represents the correct formulas for PP and MRMR in terms of QDQD?
Select one: a. P=100020QDP=100020QD ; MR=100040QDMR=100040QD
b. P=100010QDP=100010QD ; MR=1000QD20QD2MR=1000QD20QD2
c. P=20+1000QDP=20+1000QD ; MR=40+1000QDMR=40+1000QD
d. P=500.05QDP=500.05QD ; MR=500.1QDMR=500.1QD
Question 2
Which of the following equations is correct, based on the data above?
Select one: a. MC=0.5Q21.5Q+268MC=0.5Q21.5Q+268
b.AVC=Q33Q2+536Q+1500QAVC=Q33Q2+536Q+1500Q
c.ATC=Q23Q+536+1500QATC=Q23Q+536+1500Q
d.AVC=Q29Q+536Q+1500AVC=Q29Q+536Q+1500
Question 3
The profit-maximizing quantity occurs at _______ and the profit-maximizing price occurs at _________.
(Since MC is in terms of Q2Q2, solving with calculus and algebra can be messy. Your table should give an exact answer.)
Select one: a. Q=8Q=8; P=$840P=$840 b. Q=14Q=14; P=$720P=$720 c. Q=12Q=12; P=$760P=$760 d. Q=6Q=6; P=$880P=$880
Question 4
How much total profit would your firm earn if you set PP and QQ at their profit-maximizing levels?
Select one: a. $612 b. $6,108 c. $6,720 d. $840
Question 5
Describe the competitiveness of the market by calculating the Lerner index.

Select one: a. 8.74% b. 23.5% c. 19.0% d. 3.12% You are given the following data for your firm, which sells high-capacity video MP3 players.
Q P TC 0 $1,000 $1,500 2 $960 $2,568 4 $920 $3,660 6 $880 $4,824 8 $840 $6,108 10 $800 $7,560 12 $760 $9,228 14 $720 $11,160 16 $680 $13,404 18 $640 $16,008 20 $600 $19,020
Question 1
Which of the following represents the correct formulas for PP and MRMR in terms of QDQD?
Select one: a. P=100020QDP=100020QD ; MR=100040QDMR=100040QD
b. P=100010QDP=100010QD ; MR=1000QD20QD2MR=1000QD20QD2
c. P=20+1000QDP=20+1000QD ; MR=40+1000QDMR=40+1000QD
d. P=500.05QDP=500.05QD ; MR=500.1QDMR=500.1QD
Question 2
Which of the following equations is correct, based on the data above?
Select one: a. MC=0.5Q21.5Q+268MC=0.5Q21.5Q+268
b.AVC=Q33Q2+536Q+1500QAVC=Q33Q2+536Q+1500Q
c.ATC=Q23Q+536+1500QATC=Q23Q+536+1500Q
d.AVC=Q29Q+536Q+1500AVC=Q29Q+536Q+1500
Question 3
The profit-maximizing quantity occurs at _______ and the profit-maximizing price occurs at _________.
(Since MC is in terms of Q2Q2, solving with calculus and algebra can be messy. Your table should give an exact answer.)
Select one: a. Q=8Q=8; P=$840P=$840 b. Q=14Q=14; P=$720P=$720 c. Q=12Q=12; P=$760P=$760 d. Q=6Q=6; P=$880P=$880
Question 4
How much total profit would your firm earn if you set PP and QQ at their profit-maximizing levels?
Select one: a. $612 b. $6,108 c. $6,720 d. $840
Question 5
Describe the competitiveness of the market by calculating the Lerner index.

Select one: a. 8.74% b. 23.5% c. 19.0% d. 3.12% You are given the following data for your firm, which sells high-capacity video MP3 players.
Q P TC 0 $1,000 $1,500 2 $960 $2,568 4 $920 $3,660 6 $880 $4,824 8 $840 $6,108 10 $800 $7,560 12 $760 $9,228 14 $720 $11,160 16 $680 $13,404 18 $640 $16,008 20 $600 $19,020
Question 1
Which of the following represents the correct formulas for PP and MRMR in terms of QDQD?
Select one: a. P=100020QDP=100020QD ; MR=100040QDMR=100040QD
b. P=100010QDP=100010QD ; MR=1000QD20QD2MR=1000QD20QD2
c. P=20+1000QDP=20+1000QD ; MR=40+1000QDMR=40+1000QD
d. P=500.05QDP=500.05QD ; MR=500.1QDMR=500.1QD
Question 2
Which of the following equations is correct, based on the data above?
Select one: a. MC=0.5Q21.5Q+268MC=0.5Q21.5Q+268
b.AVC=Q33Q2+536Q+1500QAVC=Q33Q2+536Q+1500Q
c.ATC=Q23Q+536+1500QATC=Q23Q+536+1500Q
d.AVC=Q29Q+536Q+1500AVC=Q29Q+536Q+1500
Question 3
The profit-maximizing quantity occurs at _______ and the profit-maximizing price occurs at _________.
(Since MC is in terms of Q2Q2, solving with calculus and algebra can be messy. Your table should give an exact answer.)
Select one: a. Q=8Q=8; P=$840P=$840 b. Q=14Q=14; P=$720P=$720 c. Q=12Q=12; P=$760P=$760 d. Q=6Q=6; P=$880P=$880
Question 4
How much total profit would your firm earn if you set PP and QQ at their profit-maximizing levels?
Select one: a. $612 b. $6,108 c. $6,720 d. $840
Question 5
Describe the competitiveness of the market by calculating the Lerner index.

Select one: a. 8.74% b. 23.5% c. 19.0% d. 3.12%

Explanation / Answer

1. for P=1000, QD=0

P=960, QD=2

The demand curve will be

P=1000+(960-1000)*QD/(2-0) = 1000-20QD

MARGINAL REVENUE, MR= d(P*QD)/d(QD) = d(1000QD-20QD^2)/d(QD) = 1000-40QD

a. P=100020QD; MR=100040QD

2. c.ATC=Q^23Q+536+1500/Q

3. PROFIT MAXIMIZATION OCCURS AT

MC=MR

MC=3Q^2-6Q+536

MR=1000-40Q

3Q^2-6Q+536=1000-40Q

SOLVING EQUATION

Q=8

P=840

a. Q=8; P=$840

4. PROFIT = P*Q-TC = 8*840-6108 =$ 612

a. $612

5. LERNER INDEX = 1-MC/P

MC=3*8^2-6*8+536 = 680

P=840

LERNER INDEX = 1-680/840=19%

c. 19.0%

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