How to I calculate the average P/E of a particular industry?

Can you solve this problems related to microeconomics?

• 11.11) A monopolist faces a demand curve P = 210 - 4Q and initially faces a constant marginal cost MC= 10. a) Calculate the profit-maximizing monopoly quantity and compute the monopolist's total revenue at the optimal price. b) Suppose that the monopolist's marginal cost increases to MC = 20. Verify that the monopolist's total revenue goes down. c) Suppose that all firms in a perfectly competitive equilibrium had a constant marginal cost MC = 10. Find the long-run perfectly competitive industry price and quantity. d) Suppose that all firms' marginal costs increased to MC = 20. Verify that the increase in marginal cost causes total industry revenue to go up. 11.21) A monopolist producing only one product has 2 plants with the following marginal cost functions: MC1 = 20 + 2Q1 and MC2 = 10 + 5Q2, where MC1 and MC2 are the marginal costs in plants 1 and 2, and Q1 and Q2 are the levels of output in each plant, respectively. If the firm is maximizing profits and is producing Q2 = 4, what is Q1? 11.25) The demand curve for a certain good P = 100 -Q. The marginal cost for a monopolist MC(Q) = Q, for Q ≤ 30. The maximum that can be supplied in this market is Q = 30, that is, the marginal cost is infinite for Q > 30. a) What price will the profit-maximizing monopolist set? 12.11) Suppose that Acme Pharmaceutical Company discovers a drug that cures the common cold. Acme has plants in both the United States and Europe and can manufacture the drug on either continent at a marginal cost of 10. Assume there are no fixed costs. In Europe, the demand for the drug is QE = 70 – PE, where QE is the quantity demanded when the price in Europe is PE. In the United States, the demand for the drug is QU = 110 – PU, where Qu is the quantity demanded when the price in the United States is PU. a) If the firm can engage in third-degree price discrimination, what price should it set on each continent to maximize its profit? 13.4. Lets consider a market in which two firms compete as quantity setters, and the market demand curve is given by Q=4000-40P. Firm 1 has a constant marginal cost equal to MC1=20, while firm 2 has a constant marginal cost equal to MC2=40. a. find each firm’s reaction function b. find the cournot equilibrium quantities and price.

• Answer:

  these are blooming long questions. If I didn't know better, this is actually your whole homework. I'll do 11.11 a to give you a heads up: profit = TR - TC= PQ - MCQ = (210 - 4Q)*Q - (10)Q = 210Q -4Q^2 - 10Q = 200Q - 4Q^2 you maximise profit when d(profit)/dQ = 0 differential = 200 -8Q = 0 200 = 8Q Q = 200/8 = 25 for the rest of the question, you just need to change the number for MC above and redo the calculation. 11.21 if the firm is maximising profits, then in order for plant 1 to be operational with plant 2, its MC must be the same for that of the other plant, otherwise the firm would just produce stuff in plant 2. This means you let MC1 = MC2, whack in Q2 = 4 and find the answer = 30. MC1 = 30 and then solve it for Q1 11.25) MC = Q it is said that as MR = MC, profits are maximised, As MR = P, P = 100 -Q = Q. 2Q = 100 Q = 50 unfortunately, MC will = infinity for Q >30, so the optimal Q = 30. put this into the equation for P and you will get your answer 12.11) MR = MC. MR = P. figure it out 13.4) This is where I am not sure whether I can help you here. However, for a reaction function, you will need MC2 to be in Firm 1's reaction function and vice versa once you have both reaction functions, let them equal each other so that there is an equilibrium and then you can find the quantities and the price Hope this helps without you taking too much liberty of Y!A