|Question||4. LARA is a producer in a monopoly industry. Her demand
curve, total revenue curve, marginal revenue curve, total cost
curve and marginal cost curve are given as follows: (15p.)
P=12-Q [or, Q=12-P] TR=12Q-Q2 MR=20-2Q TC=20+5Q2 MC=8Q 1
a) Find the profit-maximizing level of output for LARA.
b) Find the level of profit.
c) Should LARA exit the industry in the L.R.? Why? Why
.| KKTCELL 4:16 PM @ %81 1 of 2 EASTERN MEDITERRANEAN UNIVERSITY DEPARTMENT OF ECONOMICS Microeconomics for Business ECON203] Due: 23.12.2019 Monday 16.30 1. Determine whether each statement below is true or favor uncertain and justify your answer (15p.) a) “It is impossible for hoquants to be linear and downward sloping” b) “Monopoly power must be thought of in a static context Competitive firms are price makers.” 2. The owner of tim XYZ desires to minimize costs of production of a given level of output I'l. The following diagram represents the isoquant curve the dark curve labeled as “) and the isocost lines the three parallel straight line of firm XYZ. In order to fulfill her desire the owner must select which point (A, B, on the diagram? Why not any other point? Explain (15) 3. Refer to the following figure. (15p. 19 OUTPUT a) At P $80, find the profit maximising level of output for this competitive firm in the short b) At P SB0, how much is profit in the short run? Determine the profit maximizing level of output in the long- 4. LARA is a producer in a monopoly industry. Her demand curve, total revenue curve, marginal revenue curve, total cost curve and marginal cost curve are given as follows: (150) P-12-0 (or. Q-12-P] TR-120-2 MR-20-20 TC-20+50° MC-80 a) Find the profit maximizing level of output for LARA by Find the level of profit Should LARA the industry in the LR.Why? Why not? 5. Amonopolist has set her level of output to maximize profit. The firm's marginal cost is $100, and the price elasticity of firm's demand is 5.0. (20p) a) Determine the firm's profit maximiring price by Calculate and interpret Lerner's index for this monopolist 6. Suppose your firm develops a new pharmaceutical product that may be used to reduce blood cholesterol levels, so the firm is the monopoly seller of this drug if the elasticity of demand for this new product is what markup (as of the price should your firm to set the profit- mining price for the product? (20p)