Sol-Motors is the only auto manufacturer in West Lidia, a country that prohibits the importation of cars. The graph below shows the demand and the costs for Sol-Motors. Costs and revenues (in thousands) 130 120 110 100 90 80 70 60 50 40 30 20 10 0 H H STIEFELE 15 45 MC D 30 60 Quantity per period (in thousands) 75 9010512013550165180¹95 Tools MR a. Add the marginal revenue curve to the graph above (starting at zero). Plot only the end points. b. What are Sol-Motors' profit-maximizing output and price? 4 Output: thousands Price: $ thousands c. Suppose that the government of Lidia imposes a price ceiling of $35,000 per car. What is the firm's profit-maximizing output now? thousands Profit-maximizing output: d. What would be the output if the graph represented a perfectly competitive industry rather than a monopoly? Output thousands

Sol-Motors is the only auto manufacturer in West Lidia, a country that prohibits the importation of cars. The graph below shows the demand and the costs for Sol-Motors. Costs and revenues (in thousands) 130 120 110 100 90 80 70 60 50 40 30 20 10 0 H H STIEFELE 15 45 MC D 30 60 Quantity per period (in thousands) 75 9010512013550165180¹95 Tools MR a. Add the marginal revenue curve to the graph above (starting at zero). Plot only the end points. b. What are Sol-Motors' profit-maximizing output and price? 4 Output: thousands Price: $ thousands c. Suppose that the government of Lidia imposes a price ceiling of $35,000 per car. What is the firm's profit-maximizing output now? thousands Profit-maximizing output: d. What would be the output if the graph represented a perfectly competitive industry rather than a monopoly? Output thousands

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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