Assume a competitive firm faces a market price of $100, a cost curve of: C=0.002q³+50q+750, MC = 0.006q² + 50. If a specific tax of $6 per unit is implemented, what would be the new equilibrium output level? and a marginal cost curve of: It would be units. (round your answer to two decimal places) If, instead, a lump sum tax of $548 is implemented, what would be the new equilibrium output level?
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- The local government in Karachi is considering two tax proposals: A lump-sum tax of Rs. 300 on each producer of Ice-cream. A tax of Rs. 1 per unit of Ice-cream, paid by producers of Ice-cream. Which cost curves; average fixed cost, the average variable cost, average total cost, and marginal cost would shift as a result of the lump-sum tax? Why? 2.Which cost curves; average fixed cost, the average variable cost, average total cost, and marginal cost would shift as a result of the per-unit tax? Why?Given Question #1 Cost function C= 3000+6Q Q = 4400 - 200Q - This is the demand function Q= 1600 P = 14 Profit= 22400-12600 = 9800 Question #2 Q=$480 Q=$1120 Question #3 Ed=−1.25 Ed=−0.55 0.5<0.8− markup index it is charging less. 0.64<-1/-0.55--markup index it is charging less. Please answer question #5 A-C 5. Optimal price in San Antonio You decide to charge different prices in the two locations. To do this, you decide to use the demand functions you estimated in Q2 to calculate separate optimal prices in the two locations. For your costs in San Antonio, you have fixed costs of $2000 per week. In addition, it costs you six dollars per burger in variable costs (ingredients, labor etc.) A. What is your cost function in San Antonio? B. Using the demand function from Q2, calculate the profit maximizing price and quantity. Is the new price higher or lower than the price if you do not price discriminate? Is this consistent with your answer from Q3? C. What are your…A local newspaper currently has 84,000 subscribers at a quarterly charge of $30.Market research has suggested that if the owners raise the price to $32, they wouldlose 5,000 subscribers. Assuming that subscriptions are linearly related to theprice, what price should the newspaper charge for a quarterly subscription tomaximize their revenue?a) Find the cost function (Hint: find slope and use point-slope form to find thecost function) b) Find the revenue function c) Find the maximum revenue d) Find the profit function
- Calculate the value of operating surplus with the following:- Rent and interest = 800 Corporate tax = 460 Dividend = 940 Undistributed profit = 3006) Suppose each firm's long-run cost function in a perfectly competitive industry is given by C(q) = q 4q+8q. Firms will enter the industry if profits are positive and leave the industry if profits are negative. Assume that the corresponding demand function is D = 4400 - 100P. (i) Compare the equilibrium price and quantity before and after the imposition of a 2 cents tax per unit sold. (ii) How much of the tax (per unit) is passed on to the consumers?Natural-ExP is a unique company that is dedicated to making day trips to the Nevado de Toluca. The service includes transportation, food and guide service. Being the number of tickets sold, if the cost function of serving a new customer is Cmg = 20q, the marginal revenue function Img = 600−40q and the demand is q = (600 − p) /20. Under this scenario, what is the price of the excursion. $400 $600 $300 $100
- functions are given as below Q_1=1200-10P_1Q_2=800-10P_2Where Q_1 is the domestic quantity: Q_2 is the foreign quantity P_1 is the domestic price/unit P_2 is the domestic price/unitThe firms total cost function is given by; TC=0.05Q^2+10,000Required.Determine the price and quantities that maximize the firm’s profits .What is the maximum profit for the firm? Compute the price elasticities of demand in both the domestic and foreign market.The long-run cost function of one of the identical carrot-producing firms is C(q) = 45q-q² +0.01g³. The market demand curve is Q = 10,000 - 190p. Now, the government starts collecting a specific tax, t = 15, on the carrot market The market quantity demanded is 8500, the number of firms is 200 The market quantity demanded is 2850, the number of firms is 53 The market quantity demanded is 3350, the number of firms is 67 The market quantity demanded is 5420, the number of firms is 156 None of the answers holda. A firm faces the following average revenue (demand) curve:P = 120 − 0.02Qwhere Q is weekly production and P is price, measured in cents per unit. The firm’s cost function is given by C = 60Q + 25,000. Assume that the firm maximizes profits. i. What is the level of production, price, and total profit per week?ii. If the government decides to levy a tax of 14 cents per unit on this product, what will be the new level of production, price, and profit?
- . An electricity producer has a constant marginal cost of production equal to $40 per megawatt. The residual demand for its electricity is given by P (q) = a−bq, where P is the price and q is the quantity of power generated by this producer. The producer knows the slope, b, but he vertical intercept of the residual demand curve, a is unknown. Assume A and B are greater than zero. If you get stuck, you may answer any of the following questions for special case where a = 80 And b = 0.5 for partial credit. (a) What is the marginal revenue, M R(q), for this producer? b) What is the optimal q for this producer? (c) What is the electricity producer’s optimal price? (d) What is the electricity producer’s optimal bid in a uniform price Auction? e) Suppose b is equal to zero. Would the producer have an incentive to submit a bid above its marginal cost? Explain.5. Assume than a non-competitive firm faces a downward sloping firm demand curve, P(Q), and has the cost curve, C(Q)= cQ. Suppose that the government taxes firm profits at a rate of t (the firm keeps profits of (1-t)) a) What will be the impact of the tax on the profit maximizing quantity of the firm? What will be the effect on the price charged? Suppose instead that the government imposes a tax on the price that the firm charges. Specifically if the firm is charging P(Q) then after the imposition of the tax, the firm would receive only (1-t)P(Q) where t is the tax rate. b) Write the firm's profit function as a function of Q and t. Write the first order conditions that define the profit maximizing level of output QM for the firm. What is the impact of the tax on the MR of the firm?A company has two products, and the following demand functions p1 = 100-2q1 + q2 p2 = 75 +2q1 -q2 the firms cost function is K = 1000 + 20q1 + 10q2 + 2q1q2 show that the profit function is T = -2Q?- Q+ Q1Q2 + 80Q1 + 65Q2 – 1000. %3D