07 Jun Question 1) The Demand function is Q=100-5P.
Question
1) The Demand function is Q=100-5P. The cost function is TC=C=100+60(Q)+(Q)2
a) Find MR and MC
b) Demonstrate that profit is maximized at the quantity where MR=MC
c) Derive he relationship between marginal revenue and the price elasticity of demand, and
show that the profit maximizing price and quantity will never be the unit elastic point on the
demand curve
2) Explain the competitive process when a firm earns a positive economic growth?
3) Explain what is different between firms in monopolistic competition and the firms in
oligopoly .What do this difference mean for prices and quantities and for economic profit?
4) A Firm has estimated the following demand function for its product :
Q=-8-2P+0.10 I+A
Where Q is quantity demanded per month in thousands, P is product price, I is an index of
consumer income and A is advertising expenditures per month in thousands. Assume that P
=$10,I=100, and A=20.
Based on this information ,calculate values for :Quantity demanded: Price elasticity of demand
income elasticity of demand :and advertising elasticity.(Use the point formulas to complete the
required elasticity calculations.)
5) The market supply and demand functions for a product traded on a perfectly competitive market
are given below :
QD =40-P
QS=-5+4P
Based on this information, calculate the equilibrium price and quantity in this market
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