You are given the following data for your firm, which sells high-capacity video
ID: 1116293 • Letter: Y
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
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Which of the following represents the correct formulas for PP and MRMR in terms of QDQD?
Select one:
a. P=100020QD; MR=100040QDM
b. P=100010QD; MR=1000QD20QD2
c. P=20+1000QD; MR=40+1000QD
d. P=500.05QD; MR=500.1Q
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Which of the following equations is correct, based on the data above?
Select one:
a. MC=0.5Q21.5Q+268
b. AVC=Q33Q2+536Q+1500/Q
c. ATC=Q23Q+536+1500/Q
d. AVC=Q29Q+536Q+1500
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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=8 P=$840
b. Q=14; P=$720
c. Q=12; P=$760
d. Q=6; P=$880
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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
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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%
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
Explanation / Answer
1) ans is A. P=1000-20Qd and MR=1000-40Qd
2)ans is C. You can verify it by putting Q=2 and find the atc, atc at Q=2 is 1284
3) ans is A. I.e . Q=8 and P=840
4) profit=8*840-6108=612
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