Only answer #6 please Answer to #4: Profit is maximised where MR=MC Q=80-4P. P=2
ID: 1112568 • Letter: O
Question
Only answer #6 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
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 he cost of building a plant or factory there( 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 Now suppose the ie, it has to pay the tariff and its costs increase to MCnew-10. Show how this affects Apple's U.S. profits. selling in the Uni tsinpses a tariff t = 4 and Apple initially only produces in China, 6. Given that it makes relatively small profits under the tariff, Apple considers producing in the U.S. to avoid the tariff. Suppose the costs of setting up a plant there are 10 (in addition to the fixed cost of F- 5). Would Apple do it?Explanation / Answer
6) Yes Apple would do it. because although the profit will reduced but not by very much in tariff. and the fixed cost is the one time cost to the apple . the marginal cost and the variable cost does not affect. therefore, with the less marginal cost, apple can produce large quantity and sell it at lowest price to earn more profits.
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