Economics

It is assumed that the toothpaste market is perfectly competitive and the current price of a case of toothpaste is $42.00. CPI has estimated its marginal cost function to bas follows: MC=.006Q.

The Board would like to know how many cases of toothpaste should be produced in order to maximize profits.
What would happen if CPI decided to raise prices unilaterally in this toothpaste market?
What would happen to the profit maximizing level of output if the market price suddenly rose to $54 per case? Explain why the output level changes.
Could CPI benefit by advertising in this perfectly competitive market?

  1. 👍 0
  2. 👎 0
  3. 👁 191
  1. Do a little research, then take a shot. What do you think?

    Hint: Maximize profit where MC=MR. In a perfectly competitive market MR=P.
    Hint2: the demand curve facing a firm in a perfectly competitive market is a horizontal line. (in economics terms: perfectly elastic)

    1. 👍 0
    2. 👎 0
  2. Profits for producing toothpaste is 42 - .006 = 41.994

    1. 👍 0
    2. 👎 0
    posted by Sharron
  3. 2.a case of toothpaste is $42.00. CPI has estimated its marginal cost function to bas follows: MC=.006Q.

    What would happen if the prices unilaterally raised in this toothpaste market?

    1. 👍 0
    2. 👎 0

Respond to this Question

First Name

Your Response

Similar Questions

  1. Calculus

    it is assumed that the toothpaste market is perfectly competitive and the current price of a case of toothpaste is 42.00. CPI (the company) has estimated its marginal cost function to be as follows: MC (Marginal Costs) =.006Q

    asked by Janel on July 20, 2012
  2. economy

    consider a perfectly competitive market in which all firms have the same costs. choose the statement that is incorrect a)the market demand is elastic at the market price b)each firm takes the market price as given and produces its

    asked by bryan thomas on July 6, 2013
  3. Economics

    How does the market price of a good in a monopoly market compare with the market price of the same good in a perfectly competitive market? A. The price is higher. B. The price is lower. C. The prices cannot be compared. D. The

    asked by margaret on September 12, 2012
  4. Microeconomics

    What are the condition for a perfectly competivie market? Name 3 products or services that may be found in a perfectly competitive market? I know that the market has four market characteristics, or am i not on the right track. I

    asked by Susan on May 26, 2009
  5. Economics

    For the following characteristic say whether it describes a perfectly competitive firm, a monopolistically competitive firm, monopoly firm, or neither. a. Has marginal revenue less than price. I would think this would be neither.

    asked by Sally on December 5, 2006
  1. economics

    3. A homogeneous products duopoly faces a market demand function given by P = 500 − 10Q . Both firms have a constant marginal cost of MC = 200. 1 a. What would the equilibrium price in this market be if it were perfectly

    asked by Raye on November 20, 2019
  2. Economics

    In perfectly competitive market,given cost function: C=1/3q3-5q2+30q+10 and market clearing price be 6,obtain profit maximising level of output

    asked by Katelynn on March 26, 2016
  3. Economics

    A firm in a perfectly competitive market has the following cost function: c=1/3q3-5q2+30q+10 in the market- clearing price is 6, obtain the profit maximising level of output?

    asked by Karthik on March 12, 2017
  4. economics

    A monopoly firm is different from a competitive firm in that A. there are many substitutes for a monopolist's product while there are no substitutes for a competitive firm's product B. a monopolist's demand curve is perfectly

    asked by Anonymous on March 21, 2012
  5. economics

    You have the following data. A monopolist produces 1000 units of output per month, and sells it at the price of 10 each. You know that the monopolist does not do any price discrimination, and you also know that the price-cost

    asked by joe on January 13, 2011

More Similar Questions