Question

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?

Answer #1

We are considering a monopoly facing the demand QD = 400−5P ⇔ P
= 80−0.2QD. Its marginal cost is MC = 0.2Q − 4. (a) Find the
monopolist’s marginal revenue equation. (b) Find the monopoly price
and quantity in the market and display them in a graph below. Q $
(c) Is this new quantity produced efficient? Explain (d) Suppose
the monopolist is able to perfectly price discriminate. What
quantity will it sell, at what price? (e) Calculate and compare...

Suppose the inverse demand for a product produced by a single
firm is given by P = 200 ? 5Q and that for this firm MC = 20 +
2Q.
a) ) If the firm cannot price-discriminate, what are the
profit-maximizing price and level of output?
b) If the firm cannot price-discriminate, what are the levels of
producer and consumer surplus in the market? What is the deadweight
loss? Both compute and illustrate each on a graph.
c) If the...

Suppose a monopoly sells to two identifiably different types of
customers, A and B. The inverse demand curve for group A is PA = 20
- QA, and the inverse demand curve for group B is PB = 20 - 2QB.
The monopolist is able to produce the good for either type of
customer at a constant marginal cost of 4, and the monopolist has
no fixed costs. If the monopolist is unable to price discriminate
(no reselling), (1) what...

The inverse market demand curve facing a monopoly retailer of gold
jewelry is described by P=3000-0.5Q. The retailer buys jewelry at a
wholesale price, r, set by the monopolist manufacturer. Marginal
cost for the manufacturer is 500. The retailer has additional
marginal costs=100.
What is the profit-maximizing wholesale price for the
manufacturer?
What is the profit-maximizing retail price for the retailer?
What is the profit-maximizing quantity?
If the two firms merged, what would be the profit-maximizing retail
price and quantity?

Inverse Demand Equation: P=160–4Qd Marginal Revenue =
160-8Qd Marginal Costs = $0
What is price and quantity under perfect
competition?
What price would a monopoly charge? How much will it
produce?
What is the deadweight loss due to
monopoly?
If the monopolist can practice perfect price
discrimination what is consumer surplus? What is producer
surplus?

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).

Suppose a monopoly sells to two identifiably different types of
customers, A and B. The inverse demand curve for group A is PA=
20-QA, and the inverse demand curve for group B is PB= 20-2QB. The
monopolist is able to produce the good for either type of customer
at a constant marginal cost of 4, and the monopolist has no fixed
costs. If the monopolist is unableto price discriminate (no
reselling), (1) what arethe profit maximizing price and quantity,
and...

Hawkins micro brewery has a monopoly on oatmeal stout in the local
market. The inverse demand is P = 50 - 0.5Q. The marginal revenue
is MR = 50 - 1Q. MC = 5 + 0.5Q.
Calculate Hawkins profit maximizing output.
Calculate the producer surplus.
Calculate the dead-weight loss.
What is the optimal price ceiling?
If Hawkins was able to practice perfect price discrimination
what price would it charge?
What is the new prucer surplus.

A
monopoly has an inverse demand curve given by: p=28-Q
And a constant marginal cost of $4. Calculate deadweight loss
if the monopoly charges the profit-maximizing price.
Round the number to two decimal places.

Consider a monopolist facing a market demand given by
P = 100 - 2Q
where P Is the price and Q is the quantity. The monopolist
produces the good according to the cost function
c(Q)=Q2+10
(a) Determine the profit maximizing quantity and price the
monopolist will offer in the market
(b) Calculate the profits for the monopolist.
(c) Calculate the deadweight loss due to a monopoly. Illustrate
this In a well labelled diagram.

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