A firm sells its product in a perfectly competitive market where

A firm sells its product in a perfectly competitive market where other firms charge a price of $70 per unit. The firm’s total costs are C(Q) = 50 + 10Q + 2Q2.

a. How much output should the firm produce in the short run?


b. What price should the firm charge in the short run?


c. What are the firm’s short-run profits?


d. What adjustments should be anticipated in the long run?


Exit will occur since these economic profits are too low.


Entry will occur until economic profits shrink to zero.


No firms will enter or exit at these profits.


Problem 08-13 (Essay, Autogradable)

When the first Pizza Hut opened its doors back in 1958, it offered consumers one style of pizza: its Original Thin Crust Pizza. Since its modest beginnings, Pizza Hut has established itself as the leader of the $25 billion pizza industry. Today, Pizza Hut offers six styles of pizza, including Pan Pizza, Stuffed Crust Pizza, and its Hand-Tossed Style.

Pizza Hut’s strategy of rolling out new pizza offerings over time is consistent with the company competing in what type of market?


Perfect competition






Monopolistic competition

What is the long-run profitability of this strategy?


High economic profits


Zero economic profits


Negative economic profits



Problem 08-04

You are the manager of a monopoly, and your demand and cost functions are given by P = 300 – 3Q and C(Q) = 1,500 + 2Q2, respectively.

a. What price–quantity combination maximizes your firm’s profits?

Price: $[removed]
Quantity: [removed]units

b. Calculate the maximum profits.


c. Is demand elastic, inelastic, or unit elastic at the profit-maximizing price–quantity combination?

d. What price–quantity combination maximizes revenue?

Price: $[removed]
Quantity: [removed]units

e. Calculate the maximum revenues.


f. Is demand elastic, inelastic, or unit elastic at the revenue-maximizing price–quantity combination?


Problem 08-14 (Algo)

You are the manager of a small pharmaceutical company that received a patent on a new drug three years ago. Despite strong sales ($150 million last year) and a low marginal cost of producing the product ($0.50 per pill), your company has yet to show a profit from selling the drug. This is, in part, due to the fact that the company spent $1.7 billion developing the drug and obtaining FDA approval. An economist has estimated that, at the current price of $1.50 per pill, the own price elasticity of demand for the drug is -2.

Based on this information, what can you do to boost profits?


Reduce price.


Keep price the same.


Raise price.



Problem 08-12

You are the manager of a small U.S. firm that sells nails in a competitive U.S. market (the nails you sell are a standardized commodity; stores view your nails as identical to those available from hundreds of other firms). You are concerned about two events you recently learned about through trade publications: (1) the overall market supply of nails will decrease by 2 percent, due to exit by foreign competitors; and (2) due to a growing U.S. economy, the overall market demand for nails will increase by 2 percent.

Based on this information, should you plan to increase or decrease your production of nails?


Increase output.


It is not possible to tell with the given information.


Leave output unchanged.


Decrease output.



Problem 08-17

You are the general manager of a firm that manufactures personal computers. Due to a soft economy, demand for PCs has dropped 50 percent from the previous year. The sales manager of your company has identified only one potential client, who has received several quotes for 10,000 new PCs. According to the sales manager, the client is willing to pay $800 each for 10,000 new PCs. Your production line is currently idle, so you can easily produce the 10,000 units. The accounting department has provided you with the following information about the unit (or average) cost of producing three potential quantities of PCs:


10,000 PCs

15,000 PCs

20,000 PCs

 Materials (PC components)












 Total unit cost




Based on this information, should you accept the offer to produce 10,000 PCs at $800 each?






You should be just indifferent between accepting and declining.


Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

We always make sure that writers follow all your instructions precisely. You can choose your academic level: high school, college/university or professional, and we will assign a writer who has a respective degree.

Professional and Experienced Academic Writers

We have a team of professional writers with experience in academic and business writing. Many are native speakers and able to perform any task for which you need help.

Free Unlimited Revisions

If you think we missed something, send your order for a free revision. You have 10 days to submit the order for review after you have received the final document. You can do this yourself after logging into your personal account or by contacting our support.

Prompt Delivery and 100% Money-Back-Guarantee

All papers are always delivered on time. In case we need more time to master your paper, we may contact you regarding the deadline extension. In case you cannot provide us with more time, a 100% refund is guaranteed.

Original & Confidential

We use several writing tools checks to ensure that all documents you receive are free from plagiarism. Our editors carefully review all quotations in the text. We also promise maximum confidentiality in all of our services.

24/7 Customer Support

Our support agents are available 24 hours a day 7 days a week and committed to providing you with the best customer experience. Get in touch whenever you need any assistance.

Try it now!

Calculate the price of your order

Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

No need to work on your paper at night. Sleep tight, we will cover your back. We offer all kinds of writing services.


Essay Writing Service

No matter what kind of academic paper you need and how urgent you need it, you are welcome to choose your academic level and the type of your paper at an affordable price. We take care of all your paper needs and give a 24/7 customer care support system.


Admission Essays & Business Writing Help

An admission essay is an essay or other written statement by a candidate, often a potential student enrolling in a college, university, or graduate school. You can be rest assurred that through our service we will write the best admission essay for you.


Editing Support

Our academic writers and editors make the necessary changes to your paper so that it is polished. We also format your document by correctly quoting the sources and creating reference lists in the formats APA, Harvard, MLA, Chicago / Turabian.


Revision Support

If you think your paper could be improved, you can request a review. In this case, your paper will be checked by the writer or assigned to an editor. You can use this option as many times as you see fit. This is free because we want you to be completely satisfied with the service offered.