Homework4Fall2019.pdfManagerial Economics – HW 4Name:_____________________ Must Show Work for Full...

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Homework4Fall2019.pdfManagerial Economics – HW 4Name:_____________________ Must Show Work for Full or Partial CreditQuestion 1: Use the information below to calculate the output that would maximize the firm's profit or minimize its lost.What was the firm's total economic profit or loss?TC = 40+120Q+10Q2TR = 600QQuestion 2: (Graphs must be hand drawn).Part A: Draw MC, ATC, and AVC on a graph representing the cost of a toy plane manufacture.  Assume the firm is a price taker (perfect competition).  Draw a line representing the price the firm will revive for its product as it varies its output.  Draw a line representing the MR the firm will revive for its product as it varies its output.  Deduce from the graph if the firm is earning an economic profit or loss.  Indicate on the graph the firm's total economic profit or loss.Part B: Draw MC, ATC, and AVC on a graph representing the cost of an ear muff manufacture.  Assume thefirm is a price searcher (Monopoly or Monopolistic Competition).  Draw a line representing the price the firm will revive for its product as it varies its output.  Draw a line representing the MR the firm will revive for its product as it varies its output.  Deduce from the graph if the firm is earning an economic profit or loss.  Indicate on the graph the firm's total economic profit or loss.Question 3:Part A: Explain why in the long run economist expect a price taking firm to earn a normal economic profit?Part B: Explain why a price searcher cuently earning an economic profit is expect to earn an economic profit in the long run.Question 4: Use the information below to answer the following questions.Market share of every Kleenex Maker: A. 350 B. 250 C. 200 D. 175 E. 25Part A: Calculate Four-firm concentration ratio.Part B: Calculate Herfindahl-Hirschman Index (HHI). Part C: Imagine you are company A trying to avoid being regulated.  Argue two ways can these indexes overestimate competition?Part D: Imagine you are company E trying to get company E to be regulated.  Describe two ways these indexes underestimate competition?Question 5: Imagine you are an economic adviser to Firm A.  Answer the questions below as if you are giving advice to the firm on how to make the most money.Part A: What are the positives and negatives of nationalizing a monopoly?  Part B: What are the positives and negatives of regulating prices or profits earned by a monopoly?  Part C: Under what conditions can a monopoly form without any special privileges granted by the government?Part D: Provide three ways a government can contribute to the formation of a monopoly.

Dr. Smita · Accepted Answer

Question 5:
Part A: Nationalizing a Monopoly
Nationalization of monopoly has the following advantages:
· Nationalization is an alternative to avoid the dominant firms to use their market powers.
· Nationalization of natural monopolies protects consumers from exploitation in forms of poor quality product and high pricing.
· Nationalization favors overall economic well being of the nation and ensured equitable distribution of goods and services.
On the other hand,

Homework4Fall2019.pdf Managerial Economics – HW 4 Name:_____________________ Must Show Work for Full or Partial Credit Question 1: Use the information below to calculate the output that would maximize...

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