1. The following table contains valuations for goods X and Y. Suppose that the marginal cost of producing X is 1, and this is equal to the marginal cost of pro- ducing Y. Product X Product Y Consumer type 1 4 3 Consumer type 2 3 3 Consumer type 3 (a) Find the optimal monopoly price in case of pure bundling. (b) Find the optimal monopoly price in case of mixed bundling. Which among strategies a) and b) gives higher profits to the monopolist? Product X Product Y Product X+Y Consumer 1 4 3 7 Consumer 2 3 3 Consumer 3 4. 4.

1. The following table contains valuations for goods X and Y. Suppose that the marginal cost of producing X is 1, and this is equal to the marginal cost of pro- ducing Y. Product X Product Y Consumer type 1 4 3 Consumer type 2 3 3 Consumer type 3 (a) Find the optimal monopoly price in case of pure bundling. (b) Find the optimal monopoly price in case of mixed bundling. Which among strategies a) and b) gives higher profits to the monopolist? Product X Product Y Product X+Y Consumer 1 4 3 7 Consumer 2 3 3 Consumer 3 4. 4.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

5. Tom is a monopolist input supplier to Dick and Harry. Tom's marginal cost is 1. Dick and Harry are duopolists with production function q x/2 No firm has fixed costs. The demand for the final product is given by Q 100-p. a) Assume Dick and Harry buy the input from Tom at price k. What are their cost functions? b) Find the Cournot equilibrium quantities. c) What price, k, should Tom set? d) Now suppose Dick could buy Tom's firm and stop supplies of the input to Harry so that Dick would be a monopolist. How much is Dick willing to pay for Tom's firm? e) How much is Tom willing to sell his firm for?
7) Candice wants to sell two types of chocolate bars, Dark (D) and White (W) to three consumers: A, B, and C. Each consumer's reservation price for each bar is given in the figure below. Candice purchases each bar at a cost of 1. Candice considers practicing either pure or mixed bundling. What is the maximum profits Candice can earn? BC 0 3 2 2 A Dark White 3
3. Call Your Aunt is a monopoly seller of deli sandwiches. In DC, the demand curve is p = 16 In Maryland, it is p y Marginal cost is 4. = 12 100 100 (i) Find the profit-maximizing prices under third-degree price discrimination. (ii) Find the profit-maximizing uniform price. (iii) Now 14 – By, where B is a positive constant. Without calculating the new profit-maximizing uniform price, explain whether it is higher or lower than in (ii). suppose that Call Your Aunt starts to sell in Virginia. The demand curve is p
USUALLY THERE IS MORE THAN ONE !! ANSWER!!! Select the statements below that are consistent with the input choice decisions of profit-maximizing competitive firms and monopolies. Choose one or more: A. Monopolistic firms choose inputs of production at the point where the marginal revenue from each input equals the marginal cost. Competitive firms do not. B. Competitive firms choose inputs of production at the point where the marginal revenue from each input equals the marginal cost. Monopolies do not. C. For competitive firms, the marginal revenue product of an input equals the value of the marginal product. D. If the demand for a product is perfectly elastic, all else being equal, the optimal amount of an input of production is the same for a monopolist as it is for the competitive market as a whole. E. For a monopoly facing a downward-sloping demand curve, the marginal revenue product of an input equals the value of the marginal product. F. Competitive firms and monopolies choose…
5) Suppose a monopoly produces film and cameras. Consumers demand pictures, which require film and one camera. Two different types of consumers have the following demand for film, qÃ = 100 - 10p and q = 80 - 10p. The monopoly cannot price discriminate in the market for film or the market for cameras, but it can bundle the products. The monopoly produces film at a constant marginal cost of $1 per roll. What price will the monopoly set for film and for cameras?
1
The diagram at right shows the demand curve, marginal revenue curve, and cost curves for a single-price monopolist that owns the only golf courses on Eagle Island. The monopolist's product is 18-hole golf games. a. Now suppose the monopolist is able to charge a different price on each different unit sold. What would be the total number of rounds of golf sold per week? rounds. (Round your response to the The total number of rounds sold per week is 600 nearest whole number) What would be the price on the last round sold? The price on the last round sold is $200 (Round your response to the nearest dollar) b. What is the value of the consumer surplus if the monopolist cannot price discriminate at all? The value of the consumer surplus is $ 40000 (Round your response to the nearest dollar) c. What is the value of the consumer surplus when the monopolist is practicing this "perfect price discrimination? The value of the consumer surplus is $ (Round your response to the nearest dollar) Price…
3
Answer to the question and reasoning involved please
2. A monopolist sells tours of a stately Montana home to two groups of consumers, Montanans (M) and others (O). The monopolist knows the total demand for group O, which is Qo=100-2P, and the total demand for group M, which is QM =80-2P. The monopolist is able to identify consumers by inspecting their IDs and can thus apply third-degree price discrimination. The monopolist's cost function is C(G) = 4Q + 20. a. What price will the monopolist charge for group O? What price will the monopolist charge for group M? What is the monopolist's total profit? For the next questions assume that it has become illegal to charge different prices and thus the monopolist must charge the same price to everybody. b. Write down equations representing (1) aggregate demand and (2) marginal revenue at all possible prices. Find the profit maximizing price and output. Will both O's and M's purchase tours, or only one or the other? c. Suppose that the monopolist charges $44. What is total consumer surplus at…
2. A monopolist has two specific demanders with demand equations: qA = 10 – p and qB = 10 – 2p. This monopolist implements an optimal two-part tariff pricing scheme, under which demanders pay a fixed feea for the right to consume the good and a uniform price p for each unit consumed. The monopolist chooses a and p to maximize profits. This monopolist produces at constant average and marginal costs of AC = MC = 2. The monopolist’s profits are __________ and the average price paid by demander B is _________.
Exercise A.3 Compare the competitive equilibrium with that of the first-degree price discriminating monopolist. Indicate the similarities and differences that exist in prices, quantities produced, consumer surplus and loss of efficiency between both situations. Represent graphically assuming that the marginal cost is constant