Economics Question Help!! Specifically B and C!

Posted on 2013-11-21 13:40:00 in Economics by LAUREN

Only one firm produces and sells soccer shoes in the country of Wiknam, and as the story begins, international trade in soccer shoes is prohibited. The following equations describe the monopolist’s demand, marginal revenue, total cost, and marginal cost:

Demand: P=10-Q

Marginal Revenue: MR=10-2Q

Total Cost: TC= 3+Q+1/2Q^2

Marginal Cost: MC=1+Q

Where Q is quantity and P is the price measured in Wiknamian dollars.

i. How many soccer shoes does the monopolist produce? At what price are they sold? What is the monopolist’s profit?

ii. One day, the King of Wiknam decrees that henceforth there will be free trade-either imports or exports- of soccer shoes at the world price of $6. The firm is now a price taker in a competitive market. How many soccer shoes will be produced by the firm of Wiknam? What is its profit at this price?

iii. What is domestic consumption? Does Wiknam export or import soccer shoes? How many soccer shoes does Wiknam export (import)?

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