Managerial Economics- URGENT

posted by .

The Blue Dragon Restaurant is a new Chinese Restaurant in town. As the only Chinese restaurant in the area, it faces the following daily demand curve:

Q = 500 – 25 P

Where Q is the number of meals it serves per day and P is the average price of its meals.
The cost function of the restaurant has been estimated as follows:

TC = 200 + 8 Q + .02 Q^2
a. Determine the profit-maximizing price of each meal assuming The Blue Dragon is behaving as a monopoly.
b. Determine the profit of the Restaurant.
c. If the company were to produce as a perfectly competitive firm, how much would it produce?
d. What price should it charge as a competitive firm?
e. Would it still make a profit if it behaved like a competitive firm?
As a result of the success of the Blue Dragon other Chinese restaurants start appearing in the area. As the Blue Dragon’s customers gradually start trying other (new) Chinese restaurants, its demand curve gets flatter (more elastic) and shifts to the left. In reaction, The Blue Dragon lowers its price and adjust its output to the point that, eventually, its (economic) profit disappears; It becomes equal to zero. At that point the slope of its demand curve becomes -0.03 .
f. Determine the new (equilibrium) average price The Blue Dragon charges for its meals.
g. Write the equation for this new (zero profit) demand curve.

Hint:
MC = 8 + .04 Q
Slope of ATC = -200/Q^2 + .02


On Wed., Dec 13, Heather asked a very similar question. See my post.

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. Managerial Economics--HELP!!

    Pappa's Restaurant is a new Italian Restaurant in town. As the only Italian restaurant in the area, it faces the following daily demand curve: Q = 500 – 25 P Where Q is the number of meals it serves per day and P is the average price …
  2. English

    There is a stranger near the museum. You have to give directions to the stranger so that he or she may find the right place. 1. Show him the way to the restaurant. 2. Tell him how to get to the restaurant. 3. Show the way to the restaurant …
  3. English

    The Chinese restaurant is on the fire station. (When the fire station is on the second floor, and the restaurant is on the first floor, can we use this expression?
  4. English

    1. The flower shop is on the restaurant. 2. The flowe shop is above the restaurant. 3. The flower shop is over the restaurant. (Thank you. Do we have to use only 'above' when on the first floor, there is a restaurant, and there is …
  5. math/algebra

    I’m working at this restaurant making $30,000 a year. Another restaurant really wants to have me manage their restaurant they are offering to pay me 2 ¾ times more then I make now. How much would I be making?
  6. English

    A: I'm very hungry. B: Let's go to the restaurant then. (In this sentence, what is the use of 'the' before 'restaurant'?
  7. Math

    Alex's favorite restaurant is a buffet-style Chinese restaurant downtown. Each time he goes, he chooses 2 appetizers and 1 entree. If the restaurant has four appetizers and 5 entrees to choose from, how many, times could Alex go to …
  8. statistics

    In a certain city, a fast food chain feels it is giving a bad reputation because it takes too long to serve the customer. Since the chain had four restaurants in this town, it is concerned with whether all restaurants have the same …
  9. English

    1. We went far. 2. We went a long way. 3. The restaurant is far from here. 4. The restaurant is a long way from here. 5. The restaurant is not far from here. 6. The restaurant is not a long way from here. 7. How far is it from here …
  10. Maths

    Susanna owns 10 shops and 5 restaurants. She is going to visit three of her businesses and writes her list in order. The order will be: Shop, restaurant, shop OR Restaurant, shop, restaurant. How many different lists can Bethany write?

More Similar Questions