Question

2. The market for a good has an inverse demand curve of p = 40 – Q and the costs of producing the good are defined by the following total cost function: TC = 100 + 1.5Q2.

a. If this good is produced in a monopoly market, provide a graph of the demand curve, marginal revenue curve and marginal cost curve. Then calculate the equilibrium output and price .

b. Calculate the price elasticity of demand at the equilibrium price and quantity. Does demand have to be elastic or inelastic at the equilibrium market price in a monopoly? Explain your answer

c. Calculate the profits of this monopoly firm at the equilibrium price and output and show the area of profits on your graph. You will need to provide a graph of your ATC curve to do this. (Hint: ATC = MC at the minimum point of ATC.)

d. Calculate the Lerner Index for this company at its equilibrium price. How can you interpret this value? e. Calculate the deadweight loss that is created in this market and discuss what the deadweight loss represents

Answer #1

2. (10+10+6) Suppose you have the
following data:
Market demand is
P =
200 – 5Q
Total Cost Function is
TC = 150 + 6Q+ 2Q2
a) If this market has only one firm
(monopoly), compute the quantity, price and profit of this firm.
Compute PS.
b) If this market had many firms
(Perfect Competition), compute competitive market output, price,
and profit. Compute TS.
c). Illustrate your answers in (a) and
(b) on the same graph. Your graph...

2. (10+10+6) Suppose you have the
following data:
Market demand is
P =
200 – 5Q
Total Cost Function is
TC = 150 + 6Q+ 2Q2
a) If this market has only one firm
(monopoly), compute the quantity, price and profit of this firm.
Compute PS.
b) If this market had many firms
(Perfect Competition), compute competitive market output, price,
and profit. Compute TS.
c). Illustrate your answers in (a) and
(b) on the same graph. Your graph...

Suppose that the (inverse) demand curve for Cranberries is given
by P = 40 − 6Q and TC = $4Q + $3Q2
What is equilibrium Price and Quantity and Profit if the market
is competitive? 4 Points
What is equilibrium Price and Quantity and Profit if there are
two firms in the market (note Q = q1 + q2)? 5
Points
What is equilibrium Price and Quantity and Profit if there are
monopoly in the market (note Q = Q)?...

A monopolist faces inverse demand p = 40 − 2q and has a marginal
cost of 20.
(a) [20 points] What output will the monopolist produce?
(b) [10 points] What are consumer surplus, monopoly profits, and
deadweight loss?
(c) [10 points] Suppose the monopolist’s costs rise to 90. What
are consumer surplus, monopoly profits, and deadweight loss
now?
Please help to explain part (c).

1. Inverse demand is P = 245 – 2Q and inverse supply is P = 20 +
Q. a. What is the equilibrium price and quantity in this market? b.
Graph the supply and demand curves, correctly identifying the
intercepts and equilibrium. c. Is the equilibrium quantity in the
elastic, unit elastic, or inelastic portion of the demand curve?
Explain. d. Suppose inverse supply changes to P = 10 + 0.5Q. Is
this an increase or decrease in supply? Graph...

Assume the inverse demand curve a monopoly faces is p = 100 -
2Q, and MC is constant at 16.
Find the monopoly’s profit maximization output.
Find the monopoly’s profit maximization price.
Find the monopoly’s maximum profit.
Find the monopoly’s deadweight loss.
Please show work for parts c and d

A monopoly is facing inverse demand given by P = 40−0.5Q and
marginal cost given by MC = 7+0.1Q. Illustrate these on the graph
and answer the questions below.
(a) If the monopolist is unable to price discriminate, what is
the profit-maximizing quantity? What is the price? What is consumer
surplus? Producer surplus? Deadweight loss?
(b) Suppose instead the monopolist is able to perfectly price
discriminate. How many units will be sold? What is consumer
surplus? Producer surplus? Deadweight loss?

A monopolistically competitive firm faces the inverse demand
curve P = 100 – Q,and its marginal cost is constant at $20. The
firm is in long-run equilibrium.
a.Graph the firm's demand curve, marginal revenue curve, and
marginal cost curve. Also, identify the profit-maximizing price and
quantity on your graph.
b.What is the value of the firm's fixed costs?
c.What is the equation for the firm's ATC curve?
d.Add the ATC curve to your graph in part a
please actually graph...

A monopoly has an inverse market demand of ? = 100 − ? where ?
is the market price and ? is the market quantity demanded and a
constant marginal cost of $50. Find the deadweight loss caused by
the allocative inefficiency of the monopoly.

A monopolist faces an inverse demand curve P(Q)= 115-4Q and
cost curve of C(Q)=Q2-5Q+100.
Calculate industry output, price, consumer surplus, industry
profits, and producer surplus if this firm operated as a
competitive firm and sets price equal to marginal cost.
Calculate the dead weight loss sue to monopoly.

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