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...

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.

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.

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...

10. The demand for milk and the total costs of a dairy are
specified by the following equations:
P(Q) = 100 − Q
TC(q) = 30q
(a) Suppose there is a monopoly in the industry. Derive an
equation for marginal revenue of the monopolist. Graph the demand
and marginal revenue curves.
(b) Derive the marginal cost (MC) and average cost (AC) of milk
production. Graph MC and AC on the same graph as (a).
(c) Show the monopoly’s profit-maximizing price...

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