Question

The market demand curve for some type of shrimp in Louisiana has
the following form: Q=200-2P. There are 500 competitive shrimpers
in the market and the **sum** of their marginal costs
curves is MC=20+2Q.

a) Find the equilibrium price and quantity demanded and supplied in
this market.

b) Write down the demand function faced by one of these small
producers.

c) Now, a wise guy buys out all 500 shrimpers and monopolizes the
market. What price will he charge for shrimp? What will be the
quantity demanded and supplied?

d) Show these two market equilibria (described in part a and part
c) on a graph.

e) Show the deadweight loss due to the monopoly on the graph. What
does it indicate? Explain in detail.

Answer #1

The demand for skateboards in Vermillion is Q = 500−2P and the
supply curve is Q = 1/2 P. The government 2
decides to raise revenue by taxing consumers $25 for each
skateboard purchased.
(a) Graph the supply and demand curves and calculate the
consumer and producer surplus that would exist if there were no tax
in the market.
(b) Show how the tax will change the market equilibrium price
and quantity. Identify the price paid by consumers and the...

Suppose the market demand function is Q = 120 – 2P, and the
marginal cost (in dollars) of producing the product is MC = Q,
where P is the price of the product and Q is the quantity demanded
and/or supplied.
How much would be supplied by a competitive market? (Hint: In a
perfect competition, the profit maximization condition is
MR=P=MC)
Compute the consumer surplus and producer surplus. Show that
the economic surplus is maximized.

A market is described by the following supply and demand
curves:
QS = 2P
QD = 400 - 3P
Solve for the equilibrium price and quantity.
If the government imposes a price ceiling of $70, does a
shortage or surplus (or neither) develop? What are the price,
quantity supplied, quantity demanded, and size of the shortage or
surplus?
If the government imposes a price floor of $70, does a shortage
or surplus (or neither) develop? What are the price, quantity...

1. Consider a demand curve of the form QD = 40 - 2P, where QD is
the quantity demanded and P is the price of the good. The supply
curve takes the form of QS = -4 + 2P, where QS is the quantity
supplied, and P is the price of the good. Be sure to put P on the
vertical axis and Q on the horizontal axis. a. What is the
equilibrium price and quantity? Draw out the supply...

Question 2. The market supply and demand curves for a product
are:
QS=0.5P (supply curve)
QD=60–2P (demand curve)
where Q is the quantity of the product and P is the market
price.
(1). Calculate the equilibrium price, equilibrium quantity and
total social welfare. (10 points)
(2). Suppose that the market has changed from a perfectly
competitive market to a monopoly market, calculate the new
price–output combination and the total deadweight loss in the
monopoly market. (10 points)

. 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...

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...

Consider a perfectly competitive market in the short-run with
the following demand and supply curves, where P is in dollars per
unit and Q is units per year:
Demand: P = 500 –
0.8Q
Supply: P = 1.2Q
Calculate the short-run competitive market equilibrium price
and quantity. Graph demand, supply, and indicate the equilibrium
price and quantity on the graph.
Now suppose that the government imposes a price ceiling and
sets the price at P = 180. Address each of...

2. The market for a good has an inverse demand curve of p = 40 –
Q and the costs of producing the good are defined by the following
total cost function: TC = 100 + 1.5Q2.
a. If this good is produced in a monopoly market, provide a
graph of the demand curve, marginal revenue curve and marginal cost
curve. Then calculate the equilibrium output and price
. b. Calculate the price elasticity of demand at the equilibrium
price...

2. The market for a good has an inverse demand curve of p = 40 –
Q and the costs of producing the good are defined by the following
total cost function: TC = 100 + 1.5Q2.
a. If this good is produced in a monopoly market, provide a
graph of the demand curve, marginal revenue curve and marginal cost
curve. Then calculate the equilibrium output and price .
b. Calculate the price elasticity of demand at the equilibrium
price...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 13 minutes ago

asked 30 minutes ago

asked 30 minutes ago

asked 31 minutes ago

asked 42 minutes ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago

asked 1 hour ago