Question

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 (Pm) and quantity (Qm) on the graph. How much are its profits? Show these on the graph. Will these profits persist in the long run? Explain your answer.

(d) What is the efficient level of milk production? Show on the graph the total surplus associated with efficient production. Show the consumer surplus that would result under monopoly. Indicate the region which is the difference between these two consumer surpluses. Explain what happens to this “missing surplus” under monopoly.

Answer #1

(a) Consider a monopoly market with the following demand
equation for a good Z.
P = 100 – 0.2 Q
Suppose fixed cost is zero and marginal cost is given by MC =
20.
Answer the following questions.
(i) Based on the information given, draw the diagram which shows
the marginal revenue (MR) curve, marginal cost (MC) curve and the
demand (D) curve of the monopoly. Show the value of X and Y
intercepts for these curves.
(ii) Explain why...

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...

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...

Suppose the (inverse) demand function facing a firm is p(q)=10 –
q, where p is the price, q is quantity.
1. Draw the (inverse) demand function and marginal revenue. Show
your detailed work such as slope, intercept.
2. Suppose the firm has a marginal cost MC=q, and it is the only
firm in the market (that is, monopoly). Find the output level and
price set by the firm based on your graph in (1). (You do not need
to derive...

The following equations represent the function of total cost of
a monopoly and the demand for a product made by the monopoly.
c = (1/12)q3 - (5/2)q2 + 30q + 100
q = 25 - p
a. Obtain the equation for revenue (r) coming from the sales of
the product expressed in fonction of the quantities produced
(q)
b. Obtain the equation for profits (?)
c. Obtain the level of production q* that would maximize the
profits of the monopoly....

. A town has a monopoly supplier of potable water. The
monopolist faces the following demand, marginal revenue, and
marginal cost curves:
Demand: P = 70 – Q
Marginal Revenue: MR = 70 – 2Q
Marginal Cost: MC = 10 + Q
Graph these curves.
Assuming that the firm maximizes profit, what quantity does it
produce? What price does it charge? Show these results on your
graph.
The local government decides to impose a price ceiling that is
10 percent...

Assume that electricity production has been done by several
regional firms in the U.S. each operating as a pure monopoly.
Explain and graphically illustrate how the electrical
monopolist would determine its profit maximizing price and output
level. (Label Pm and Qm)
Identify any area of consumer and/or producer surplus for the
profit maximizing monopoly.
Identify the deadweight loss for the monopolist.
Now assume the federal government imposes a regulation on the
monopoly. Draw a new monopoly graph for part 2....

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?

Specifically need answers to e, f, and g
Suppose a simple monopoly faces the following demand curve for
its product: P = 100 - Q. Suppose the monopolist faces total costs
given by: TC = 20Q.
a. Draw the demand curve, the marginal revenue curve, and the
marginal cost curve. Make sure to label all axes and
intercepts.
b. What are the values for the simple monopoly profit-maximizing
price and quantity? Label these on the graph.
c. Consider the consumers'...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 6 minutes ago

asked 57 minutes ago

asked 57 minutes ago

asked 1 hour ago

asked 1 hour 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

asked 2 hours ago