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28 Sep 2019
Kalamazoo Competition-Free Concrete (KCC) is a local monopolist of ready-mix concrete. Its annual demand function is
Qd = 26,000 - 200P,
where P is the price, in dollars, of a cubic yard of concrete and Q is the number of cubic yards sold per year. Suppose that Kalamazoo's marginal cost is $20 per cubic yard and its avoidable fixed cost is $150,000 per year.
a. What is its profit-maximizing sales quantity?
b. What would Kalamazoo's profit-maximizing sales quantity be if it had an avoidable fixed cost of $500,000 a year?
units.
c. What if that fixed cost were instead sunk?
Q = units.
P = $.
Kalamazoo Competition-Free Concrete (KCC) is a local monopolist of ready-mix concrete. Its annual demand function is
Qd = 26,000 - 200P,
where P is the price, in dollars, of a cubic yard of concrete and Q is the number of cubic yards sold per year. Suppose that Kalamazoo's marginal cost is $20 per cubic yard and its avoidable fixed cost is $150,000 per year.
a. What is its profit-maximizing sales quantity?
b. What would Kalamazoo's profit-maximizing sales quantity be if it had an avoidable fixed cost of $500,000 a year?
units.
c. What if that fixed cost were instead sunk?
Q = units.
P = $.
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Anne Gillian DueroLv10
28 Sep 2019
