Question

Let demand for tickets to the movies in Adelaide in summer months be represented by the following demand schedule:

price $ | quantity demanded （per summer month） |

20 | 0 |

18 | 100 |

16 | 200 |

14 | 300 |

12 | 400 |

10 | 500 |

8 | 600 |

6 | 700 |

4 | 800 |

2 | 900 |

Suppose that all movie theatres are owned by one company such that
movie tickets are supplied by a monopolist, with a constant
marginal cost of $4.

a) Calculate what number of movie tickets will be sold, and the price, if the monopolist sets the same price for all tickets and illustrate this on a clearly labelled diagram.

b) Calculate how much deadweight loss exists in the Adelaide
movie market under this single-price monopolist and illustrate this
on your diagram.

Now suppose that winter has come and the quantity of movie tickets
demanded at each price doubles. Assume the marginal cost is still
constant at $4.

c) Calculate what number of movie tickets will be sold per winter month by the monopolist, and the price, and show this on a new diagram.

d) Now imagine that the monopolist can distinguish between two types of consumers: children and adults. With the aid of a new diagram, illustrate what price is likely to be charged for children’s tickets and what price is likely to be charged for adult tickets. Using concepts of consumer surplus, producer surplus and deadweight loss, explain who gains and who loses from this third-degree price discrimination. [You don’t have to give an exactly calculated price, just indicate whether the prices would be different from each other and from the price the single-price monopolist would charge.]

Answer #1

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.

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 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.

Effects of Price Controls The accompanying table shows the
demand and supply schedules for concert tickets at Oracle Arena:
Quantities are in THOUSANDS 6 Lost Demand Ticket Price Q d Q s
$150.00 20 24 $135.00 22 22 $120.00 24 20 $105.00 26 18 $90.00 28
16 $75.00 30 14
a. Find the equilibrium price and quantity.
b. Suppose that the Oakland mayor sets a price ceiling of $105.
How large is the shortage of concert? Show on the supply...

Effects of Price Controls
The accompanying table shows the demand and supply schedules for
concert tickets at Oracle Arena:
Quantities are in THOUSANDS
Ticket Price Q d Q s
$150.00 20 24
$135.00 22 22
$120.00 24 20
$105.00 26 18
$90.00 28 16
$75.00 30 14
a. Find the equilibrium price and quantity.
b. Suppose that the Oakland mayor sets a price ceiling of $105. How
large is the shortage of concert? Show on the
supply and demand diagrams,...

The accompanying table shows the demand and supply schedules for
concert tickets at Oracle Arena: Quantities are in THOUSANDS Ticket
Price Q d Q s $150.00 20 24 $135.00 22 22 $120.00 24 20 $105.00 26
18 $90.00 28 16 $75.00 30 14 a. Find the equilibrium price and
quantity. b. Suppose that the Oakland mayor sets a price ceiling of
$105. How large is the shortage of concert? Show on the supply and
demand diagrams, and also calculate the...

A monopoly has an inverse market demand of ? = 100 − ? where ?
is the market price and ? is the market quantity demanded and a
constant marginal cost of $50. Find the deadweight loss caused by
the allocative inefficiency of the monopoly.

1. Let demand for car batteries be such that Q= 100 - 2P. Assume
constant marginal costs of 15. Compute the equilibrium price,
quantity, consumer surplus, producer surplus and if relevant
deadweight loss for:
1) A perfectly competitive firm
2) A monopoly
3) Two firms engaged in Cournot Competition
4) Two firms engaged in Bertrand Competition

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...

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