SUMMARY OUTPUT TC Q $100,000 0 $125,500 1,000 $144,000 2,000 $158,500 3,000 $172,000 4,000 $187,500 5,000 $208,000 6,000 $236,500 7,000 $276,000

Question 1

Which of the following represents the correct formulas for P and MR in terms of QD?

Select one:

a. P = 78 - 0.002QD; MR = 78 - 0.004QD

b. P = 39,000 - 500QD; MR = 39,000 - 250QD

c. P = 78 - 0.004QD; MR = 78 - 0.008QD

d. P = 39,000 - 500QD; MR = 39,000 - 1,000QD

Question 2

Which of the following equations is correct, based on the data above?

Select one:

a. MC = 0.0000015Q2 - 0.01Q + 30

b. ATC = 0.0000005Q3 - 0.005Q2 + 30Q + 100000

c. AVC = 0.0000005Q2 - 0.005Q + 30/Q

d. AVC = 0.0000005Q2 - 0.005Q + 30 + 100000/Q

Question 3

The profit-maximizing quantity occurs at _______ and at _________.

(Since MC is in terms of Q2, solving with calculus and algebra can be messy. Your table should give an exact answer.)

Select one:

a. Q = 6,000; P = $66

b. Q = 8,000; P = $62

c. Q = 8,000; P = $46

d. Q = 2,000; P = $74

Question 4

How much total profit would your firm earn if you set P and Q at their profit-maximizing levels?

Select one:

a. $496,000

b. $276,000

c. $220,000

d. $0; break even.

Question 5

Describe the competitiveness of the market by calculating the Lerner index.

Select one:

a. ≈ 25.8%

b. 46%

c. 62%

d. ≈ 34.8%