Economics (4 questions)
1) You are the manager of a monopoly that faces a demand curve described by P = 230 − 20Q. Your costs are C = 5 + 30Q. Your firm’s maximum profits are: ______________________ (do not round)
2) The demand curve for product X is given by QXd = 300 – 2PX. a. Find the inverse demand curve. PX = – QXd Instructions: Round your answer to the nearest penny (2 decimal places). b. How much consumer surplus do consumers receive when Px = $45? $ c. How much consumer surplus do consumers receive when Px = $30? $ d. In general, what happens to the level of consumer surplus as the price of a good falls? The level of consumer surplus as the price of a good falls.
3) Suppose the own-price elasticity of market demand for retail gasoline is -0.8, the Rothschild index is 0.3, and a typical gasoline retailer enjoys sales of $2,700,000 annually. What is the price elasticity of demand for a representative gasoline retailer’s product? ____________________________ (do not round)
4) You are the manager of a firm that receives revenues of $20,000 per year from product X and $90,000 per year from product Y. The own-price elasticity of demand for product X is -3, and the cross-price elasticity of demand between product Y and X is -1.3. How much will your firm’s total revenues (revenues from both products) change if you increase the price of good X by 1 percent? ______________________________________ (do not round)
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