Question

A single firm produces widgets, with a cost function and inverse demand function as follows,

C(q) = 150 + 2q P(Qd) = 10 ? 0.08Qd

(a) Calculate the monopolist’s profit-maximizing price, quantity, and profit if he can charge a single price in the market (single price monopolist).

(b) Suppose the firm can sell units after your answer to (a) at a lower price (2nd-degree price discrimination, timed-release). What quantity will be sold for what price in this second-tier market? Calculate the monopolist’s profit.

(c) Suppose each new tier of pricing the monopolist introduces increases fixed costs by $2 (quantities can be irrational). What is the profit-maximizing quantity, number of prices, monopolist’s profit, and deadweight loss?

(d) Suppose the firm can perfectly price discriminate (1st-degree) with a 40% increase in marginal cost; calculate the profit-maximizing quantity, monopolist’s profit, and deadweight loss?

(e) Between (c) and (d), which is socially preferred? Which would the monopolist choose to do?

Answer #1

2. Suppose the demand function for a monopolist’s product is
given by: Q = 80 – 5P (Total marks = 5) and the cost function is
given by C = 30 + 2Q + 0.5Q2 A) What is the inverse demand function
for this monopoly? B) Calculate the MC. C) Calculate the MR. D)
Determine the profit-maximizing price. E) Determine the
profit-maximizing quantity. F) How much profit will the monopolist
make? G) What is the value of the consumer surplus...

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...

he inverse demand function faced by a monopoly is given
byP=103Q. The monopolyhas a total cost functionTC=Q2+2Q and a
marginal cost function MC=2Q+2.
(a) What are the monopolist’s profit maximizing price and
quantity? Show these and theassociated deadweight loss on a
diagram.
(b) Calculate what price and quantity would prevail if this were
a perfectly competitive marketwith the marginal cost curve acting
as the supply curve? Show this price on your diagramfor part
(a).
(c) If the government imposes a...

A monopoly faces the following inverse demand function:
p(q)=100-2q, the marginal cost is $10 per unit.
What is the profit maximizing level of output, q*
What is the profit maximizing price
what is the socially optimal price
What is the socially optimal level of output?
What is the deadweight loss due to monopoly's profit maximizing
price?

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?

Consider a firm with the demand function P(Q)=(50-2Q), and the
total cost function TC(Q)=10,000+10Q. Find the profit maximizing
quantity. Calculate the profit maximizing price (or the market
price). Hint: MR(Q)=(50-4Q),

Suppose that a monopolist producing bicycles can divide the
aggregate demand into two groups: The domestic market and the
foreign market. The demand curve for the monopolist’s product in
the domestic market is y1=1200-10p1 and the
demand curve for the monopolist’s product in the foreign market is
y2=800-10p2. The monopolist’s total cost
function is given by C(y)= 50y where
y=y1+y2.
a) Assume that the monopolist does not practice price
discrimination. Calculate his/her profit-maximizing price-quantity
combination and the maximum profit.
b)...

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

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.

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
good according to the cost function c(q)=q^2 +10
A determine the profit-maximizing quantity and the 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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