Posted by mick on Tuesday, October 2, 2007 at 6:48am.
Suppose that a firm is the only domestic producer of a commodity and that
there are no imports of the good. The firm’s total cost and demand curves are
given by the following two equations:
TC = 6Q + ·05Q2 : Q = 360  20P
q) The government wishes to impose a maximum price of $14 on the
commodity. Assuming that the firm is a profit maximiser, what
quantity will it produce and what will be the level of its profits.
p.s. originally, p=15 and q=60

economicsmicro  economyst, Tuesday, October 2, 2007 at 10:17am
Hummm.
This firm should act like a monopolist. Your P=15 and Q=60 are what the monopolist would do sans any government intervention.
With a price cap below what the monopolist would charge, simply plug 14 into the demand equation and solve for Q. Total revenue will be 14*Q. Plug the Q into the total cost equation then calculate profit.
Answer This Question
Related Questions
 economics  3. Suppose that the total monthly demand for golf services is given ...
 Micro economics  Consider a firm with the following production function: q = (...
 econ 460  1. The demand for a new drug is given by P = 4 – 0.5Q. The marginal ...
 econ  You want to determine the profitmaximizing production quantity for a ...
 Macroeconomics  You want to determine the profitmaximizing production quantity...
 Macroeconomics  I need help to answer this question? You want to determine the ...
 econ  1. Consider a pure monopolist with shortrun total cost function given by...
 economics  suppose a firm's constantreturns to scale production function ...
 economic  1 THE COPPERBELT UNIVERSITY SCHOOL OF BUSINESS BSP 110 PRINCIPLES OF ...
 economic  1 THE COPPERBELT UNIVERSITY SCHOOL OF BUSINESS BSP 110 PRINCIPLES OF ...
More Related Questions