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jeka94
3 years ago
10

A monopolist has the total cost function c(q) = 750 + 5q. The inverse demand function is 140 - 7q, where prices and costs are me

asured in dollars. If the firm is required by law to meet demand at a price equal to its maginal costs,a. the firm will make positive profit but not as much profit as it would make if it were allowed to choose its own price.b. the firm's profits will be zero.c. the firm will lose $375d. the firm will lose $750e. the firm will lose $450
Business
1 answer:
Ierofanga [76]3 years ago
4 0

Answer:

d. the firm will lose $750

Explanation:

marginal cost is the derivate of the cost function: It represent the cost of producting an additional unit

cost: 750 + 5q

dC/dQ = 5

We have determinate that marginal cost is $5 thus, we should price at the same value. The mistake from the goverment is to equalize marginal cost with price instead of marginal revenue.

This will make the firm loss the fixed component of the cost as will sale to pay up the variable cost.

The fixed cost is $750 so that is the loss from operations

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Answer:

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6 0
3 years ago
You must estimate the intrinsic value of Noe Technologies’ stock. The end-of-year free cash flow (FCF1) is expected to be $27.50
emmasim [6.3K]

Answer:

= $52.78 per share

Explanation:

<em>The value of a business can be determined using the free cash flow model. According to this model, the value of a firm is is the present value of its free cash flow discounted at the weigthed average cost of capital (WACC.)</em>

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<em>Value of equity = Value of the entire firm - Value of debt </em>

We can work out the the value per share using the steps below:

<em>Step 1</em>

<em>Calculate the total value of the firm</em>

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 = $916.66 million

<em>Step 2</em>

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= $916.66 million - $125.0 million

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3 0
2 years ago
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BaLLatris [955]

Answer:

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Explanation:

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3 years ago
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