Question

A monopolist faces the inverse demand for its output:

p = 30 – Q

The monopolist faces a cost curve: C(Q) = 5Q. The government is seeking ways to collect

tax revenue from the monopolist by imposing an ad valorem tax of 20% on the

monopolist.

a. What price and quantity does the monopolist choose (post-tax) and how much

revenue does the government generate from the tax? Does the monopolist earn any

profits in this case? If so, how much is it? Show all the steps.

Answer #1

A monopolist faces the inverse demand for its output: p = 30 – Q
The monopolist faces a cost curve: C(Q) = 5Q. The government is
seeking ways to collect tax revenue from the monopolist by imposing
an ad valorem tax of 20% on the monopolist.
a. What price and quantity does the monopolist choose (post-tax)
and how much revenue does the government generate from the tax?
Does the monopolist earn any profits in this case? If so, how much...

A monopolist faces the inverse demand for its output:
p = 30 – Q
The monopolist faces a cost curve: C(Q) = 5Q. The government is
seeking ways to collect
tax revenue from the monopolist by imposing an ad valorem tax of
20% on the
monopolist.
1)Draw an approximate graph to depict the before-tax and
after-tax price – quantity
combination (in one graph).

A monopolist faces an inverse demand curve P(Q)= 115-4Q and
cost curve of C(Q)=Q2-5Q+100.
Calculate industry output, price, consumer surplus, industry
profits, and producer surplus if this firm operated as a
competitive firm and sets price equal to marginal cost.
Calculate the dead weight loss sue to monopoly.

A monopolist faces the following demand curve, marginal
revenue curve, total cost curve and marginal cost curve for its
product: Q = 200 - 2P
MR = 100 - Q
TC = 5Q MC = 5
a. What is the profit maximizing level of output?
b. What is the profit maximizing price? c. How much profit
does the monopolist earn?

Monopoly
Consider a situation where a monopolist faces the following
inverse market demand curve
p = 132 − 2q
and the following cost function
T C = 12q + 2q 2
f) How much deadweight loss does the monopolist create?
g) What could the government do to regulate the monopolist?

1) The inverse demand curve a monopoly faces
is
p=110−2Q.
The firm's cost curve is
C(Q)=30+6Q.
What is the profit-maximizing solution?
2) The inverse demand curve a monopoly faces
is
p=10Q-1/2
The firm's cost curve is
C(Q)=5Q.
What is the profit-maximizing solution?
3) Suppose that the inverse demand function for
a monopolist's product is
p = 7 - Q/20
Its cost function is
C = 8 + 14Q - 4Q2 + 2Q3/3
Marginal revenue equals marginal cost when output
equals...

Example 1:
Suppose a monopolist faces an inverse demand function as p = 94
– 2q. The firm’s total cost function is 1.5q2 + 45q +
100. The firm’s marginal revenue and cost functions are MR(q) = 90
– 4q and MC(q) = 3q + 45.
How many widgets must the firm sell so as to maximize its
profits?
At what price should the firm sell so as to maximize its
profits?
What will be the firm’s total profits?

A monopolist faces the inverse demand function p = 300 – Q.
Their cost function is c (Q) = 25 + 50Q. Calculate the profit
maximizing price output combination

A monopolist faces the inverse demand curve p = 120 - 6q. At
what level of output is his total revenue maximized?
20
5
20
15
10

1Suppose the firm is a monopolist. It faces a downward-sloping
demand curve, P(Q). If it also has non-negative marginal cost, will
it choose a quantity on the demand curve where the price elasticity
of demand is less than, greater than, or equal to -1? Explain.
2. Now, consider what will happen if a firm has exactly one
competitor in the market. Both firms have identical technologies
and cost structures (assuming a constant marginal cost may be
helpful), and each chooses...

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