Now what is the firms profit- maximizing price and quantity combination?

The entire market is capture by a single firm which can produce at a constant average and margi Show more The entire market is capture by a single firm which can produce at a constant average and marginal cost of AC = MC = 10. The firm faces a market demand curve given by Q = 60 ? P. (a) Calculate the profit-maximizing price and quantity combination for the firm. What is the firms profit? (b) Suppose that the market demand curve shifts outward and be- comes steeper. Market demand is now described as Q = 45?0.5P . (c) What is the firms profit-maximizing price and quantity combina- tion now? What is the firms profit? (d) Instead of the demand function assumed in part b assume instead that the market demand shift outward and becomes flatter. It is described by Q = 100 ? 2P . Now what is the firms profit- maximizing price and quantity combination? What is the firms profit? (e) Graph the three different situations in parts (a.) (b.) and (c.). Based on what you observe explain why there is no supply curve for a firm with monopoly power. Show less

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