Analyzing monopoly dynamics
I’m examining how monopoly power shapes market outcomes, considering pricing strategies and whether regulatory actions are justified.
Calculating profit
I’m defining total cost and revenue, finding profit by subtracting total cost from total revenue. By maximizing profit through differentiation, I determine the profit-maximizing quantity and price.
Verifying calculations
I’m confirming profit by checking total cost, total revenue, and profit calculations. Now, I’m working through the competitive equilibrium, where price equals marginal cost, to determine the optimal output.
Confirming the equilibrium
Interestingly enough, setting price equal to marginal cost yields a different equilibrium. I'm securing the equilibrium price and quantity, and checking the resulting profit level.
Confirming the approach
I’m analyzing the cost structure to ensure there are no fixed costs. This leads to the conclusion that setting production quantity to match perfect competition is the proper course of action.
Setting the price cap
OK, let's analyze the scenario where the government imposes a price cap, leading to zero economic profit. I'll determine the capped price that aligns marginal revenue with marginal cost.
Verifying the outcome
OK, let's check: zero economic profit at P=12 and Q=120. Total cost and total revenue align perfectly, confirming the demand function's accuracy at this equilibrium.
Pinpointing optimal output
I'm concluding that the firm can't reach a positive profit ceiling with P=12 and Q=120. It should aim for P=MC to maximize profit at this price and quantity.
Reassessing strategy
Setting P=MC at P=12 and finding Q=60 indicates the firm earns 180 profit at this price and quantity, contradicting the aim for normal profit.
Adjusting my strategy
I’m thinking about how the firm should adjust its production to align with the price ceiling, considering linear demand and quadratic cost constraints, while tracking potential profit implications.
Balancing production
I'm noting the firm needs to balance maximizing profit with production constraints. Ensuring the quantity produced is feasible given the market demand and price ceiling is key.
Balancing production and market demand
I’m thinking about how the firm should match production quantity with market demand, ensuring total revenue aligns with total cost, while keeping profit at zero.
Ensuring market alignment
I’m noting that the firm should produce up to the market demand at a fixed price, balancing production quantity with market constraints to achieve zero profit.
Balancing price and quantity
I’m working through the equilibrium point, ensuring the chosen quantity maximizes profit while adhering to the market demand and price constraints. This approach maintains zero profit as the target.
Aligning conditions
I’m piecing together the optimal quantity given a price cap, ensuring the profit-maximizing quantity aligns with market demand constraints. This avoids conflicting conditions and maintains zero profit.
Confirming equilibrium
I’m verifying that the equilibrium quantity is determined by the smaller quantity between supply and demand constraints, ensuring zero profit condition is satisfied without conflicts.
Balancing constraints
I’m gauging that the firm must produce the maximum quantity the market demands at the given price cap to keep zero profit, without creating discrepancies.
Evaluating price feasibility
I’m working through the potential prices P=18 and P=12, ensuring they align with market constraints. This helps confirm the firm can achieve zero profit under these circumstances.
Piecing together price constraints
OK, I’m confirming which price cap fits zero profit conditions without contradictions. It’s about aligning supply and demand effectively to achieve equilibrium.
Achieving zero profit
Trying to align the firm's production with market demand at a fixed price, aiming to ensure zero economic profit while balancing supply and demand constraints effectively.
Pushing for zero profit
I’m working to match the firm’s production to market demand at a fixed price, aiming for zero economic profit while balancing supply and demand constraints effectively.
Aligning equilibrium dynamics
I’m showing that with a price ceiling, equilibrium ensures the firm produces where Pc=MC, which surprisingly leads to a trivial zero profit scenario.
Aligning costs and profits
I’m figuring out that setting the price ceiling equal to the average cost maximizes profit while keeping it zero, aligning quantity with the optimal production level.
Balancing production
OK, let me see. Aligning the price ceiling with total cost maximizes profit while maintaining zero economic profit, keeping production and market demands in sync.
Balancing profit and market constraints
I’m thinking about how the firm should set production to zero when price is capped at 12, aligning with market demand to achieve zero profit dynamically.
Ensuring equilibrium production
I’m figuring out that the firm should adjust production to match demand at a fixed price of $12. This approach maintains zero profit, balancing supply and market constraints effectively.
Munking through equilibrium
OK, so under a price ceiling, equilibrium depends on supply curve intersections with the price cap, ensuring zero economic profit and balancing production with market constraints effectively.
Examining market demands
I’m analyzing the scenario where the firm must meet all market demand at the price ceiling. This leads to a possible shortage since the firm can't produce enough to match the increased demand.
Balancing production and demand
OK, let's see. Setting a price ceiling at 12 ensures zero profit by making the firm produce exactly 120 units, matching market demand perfectly.
Assessing duopoly behavior
I’m evaluating the Cournot duopoly, focusing on firm 1’s profit by combining like terms for an accurate total profit calculation. This helps determine each firm’s optimal production.
Determining equilibrium quantities
I’m optimizing each firm’s production with the combined profit functions, considering the interdependence in this Cournot duopoly setup. Progress is being made in finding an efficient equilibrium.
Adjusting production plans
OK, let’s see. Each firm is changing its production levels to boost profits. This leads to a sharper equilibrium under Cournot competition, with both firms maximizing their profits.
Thought about monopolistic and oligopolistic problems,持续 2m 4s