Question

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 Producer Surplus, Consumer Surplus and Total surplus with a single price monopolist and a perfectly price discriminating monopolist.

Answer #1

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?

4) Monopoly
The market demand curve for doodads takes the form QD = (80 –
P)/7.
a) Start a Table with doodad quantity ranging from 1 to 10, with
the corresponding price in each case. Graph the demand curve.
b) Calculate and add total revenue and marginal revenue, and add
the marginal revenue curve to your graph.
c) Is there any way that the monopolist can maximize profit by
producing 7 doodads? Explain.
d) Assume that there are no diminishing...

4) Monopoly
The market demand curve for doodads takes the form QD = (80 –
P)/7.
a) Start a Table with doodad quantity ranging from 1 to 10, with
the corresponding price in each case. Graph the demand curve.
b) Calculate and add total revenue and marginal revenue, and add
the marginal revenue curve to your graph.
c) Is there any way that the monopolist can maximize profit by
producing 7 doodads? Explain.
d) Assume that there are no diminishing...

6. Calculate (a) the monopoly price, quantity, and profit for
a firm facing a demand curve (1 pt)
Q = 400 – 4P with constant MC = 40
Hint: Remember we use “inverse” demand curve where P(Q) to use
the twice as steeply sloped rule.
b) Now write out the 3 conditions necessary for a monopolist
to be able to price discriminate. (1 pt)
c) Consider a monopolist who can use 3rd degree price
discrimination by separating the above demand...

A monopolist facing a market demand Q = 240 – 2p has the total
cost function TC(q) = q2. Draw carefully the relevant
graph with MC, MR, D curves and identify all relevant points,
intersections, intercepts.
(a) What is the monopolist’s profit maximizing quantity and
price?
(b) If the market is reorganized as perfectly competitive, what
should be the market price and quantity?
(c) Calculate the DWL associated with the monopoly in (a).
Now the government notices that the monopolist...

Suppose the demand curve is given by Qd=75-5P and the supply
curve is given by Qs=P-3. SHOW YOUR WORK in the space below (type
it out, line by line), and solve for the equilibrium price, the
equilibrium quantity, the consumer surplus, the producer surplus,
and the total surplus.

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...

1. A monopolist producer of a drug Zeta has demand P=270 – 0.2q
and costs C=5000+50q+0.2q^2.
a. Derive the MC, ATC, and MR functions.
b. Derive the profit-maximizing price, quantity, and profit.
Show on a graph.
c. What is the price and quantity if the monopolist loses patent
protection and the industry becomes perfectly competitive? What is
the size of the deadweight loss in monopoly? Show the deadweight
loss triangle in the graph.

Imagine a firm called Bapple that is the monopoly in the market
for smartwatches, with cost-functionC(Q) = 3Q2. Imagine the inverse
demand function for smartwatches isp(Q) =400−2Q.
1.1 A. What are equilibrium price and equilibrium quantity?
1.2 B. Show the equilibrium price and equilibrium quantity
graph-ically. Include the inverse demand curve, firm’s marginal
rev-enue curve, and firm’s marginal cost curve.
Now assume that Bapple is able to perfectly price discriminate
in the market for smart-watches.
1.3 C. What three conditions...

1. Consider the following demand and supply functions for a good
or service: Qd = 400 - 5P and Qs= 3P.
a) Graph the supply and demand functions in the typical manner
with price per unit (P) on the Y-axis and quantity on the X-axis.
Make sure to clearly mark X-intercept and Y-intercept on the
graph.
b) What is the slope of each line? Show your calculations.
c) What is the equilibrium price and quantity? Show your
calculations. Show the...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 20 minutes ago

asked 22 minutes ago

asked 22 minutes ago

asked 29 minutes ago

asked 38 minutes ago

asked 46 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago

asked 2 hours ago