Question

1. Suppose the market demand for Paradise Bakery's cookies is given by the equation P=45-(1/2)Q. What quantity sold would maximize the revenue from the cookies?

1-) 40

2- )45

3-) 50

4-) 55

5-) None of these are correct.

2. A monopolist enjoys a monopoly over the right to sell automobiles on a certain island. It imports automobiles from abroad at a cost of $10,000 each and sells them at the price that maximizes profits. One day, the island’s government annexes a neighboring island and extends the monopolist’s monopoly rights to this island. People on the annexed island have the same tastes and incomes and there are just as many people as on the first.

1-) The monopolist’s profits more than double.

2-) The monopolist keeps its price constant and its sales double.

3-) The monopolist doubles its price and its sales stay constant

4-) The monopolist raises its price but does not necessarily double it.

5-) The monopolist’s profits more than double.

3. A monopolist sells in two markets. The demand curve for its product is given by P= 303-3X in the first market and P = 253 - 5Y in the second market, where X is the quantity sold in the first market and Y is the quantity sold in the second market. It has a constant marginal cost of production c=3, and no fixed costs. It can charge different prices in the two markets. What is the profit maximizing combination of quantities for this monopolist?

1-) X=100; Y = 27

2-) X=75; Y = 50

3-) X=50; Y = 25

4-) X=60; Y = 23

5-) X=70; Y = 35

Answer 1