19. Firm A is monopolist in x market, and it consumes one unit of y in order to produce one unit ofx. It costs 5 + py TL to produce one unit of x. (py is the price of product y.) y is produced by amonopolist, B, and it costs 5 TL to produce one unitf of y. The demand for x is defined bypx = 50-qx (px product price, qx quantity demanded).a) Assume that px is set by Firm A and py is set by Firm B. What would be the equilibrium pricesfor products x and y? Calculate Firm A and B's profits.b) Assume that Firms A and B merge together. What would be the equilibrium prices for productsx and y? Calculate the profits of the new firm.c) Would the merger between A and B increase the consumer surplus? Why (not)?

A monopolist in economics refers to a single seller or producer who dominates a particular market.…

19. Firm A is monopolist in x market, and it consumes one unit of y in order to produce one unit of x. It costs 5 + py TL to produce one unit of x. (py is the price of product y.) y is produced by a monopolist, B, and it costs 5 TL to produce one unitf of y. The demand for x is defined by Px = 50-qx (px product price, qx quantity demanded). a) Assume that px is set by Firm A and p, is set by Firm B. What would be the equilibrium prices for products x and y? Calculate Firm A and B's profits. ) Assume that Firms A and B merge together. What would be the equilibrium prices for products x and y? Calculate the profits of the new firm. c) Would the merger between A and B increase the consumer surplus? Why (not)?

19. Firm A is monopolist in x market, and it consumes one unit of y in order to produce one unit of x. It costs 5 + py TL to produce one unit of x. (py is the price of product y.) y is produced by a monopolist, B, and it costs 5 TL to produce one unitf of y. The demand for x is defined by Px = 50-qx (px product price, qx quantity demanded). a) Assume that px is set by Firm A and p, is set by Firm B. What would be the equilibrium prices for products x and y? Calculate Firm A and B's profits. ) Assume that Firms A and B merge together. What would be the equilibrium prices for products x and y? Calculate the profits of the new firm. c) Would the merger between A and B increase the consumer surplus? Why (not)?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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At an output of 1,000 units, a monopoly firm’s average revenue is $40, its marginal revenue is $30, its marginal cost is $30, its average variable cost is $35, and fixed costs are $5,000. Given this information, we can conclude that the monopolist: a. is earning zero economic profit. b. is earning an economic profit equal to $5,000. c. is making an economic loss and should shut down. d. should increase output to maximize profit.
Barbara is a producer in a monopoly industry. Her demand curve and total cost curve are given by Q = 160 - 4P and TC = 4Q. Barbara will produce ✓ units. Barbara will charge a price of Barbara will make a profit of Suppose now the government imposes a tax of 4 dollars on each unit sold. With the tax: Barbara will produce ✓ units. Barbara will receive a price per unit of higher). Barbara will make a profit of In addition to the tax, suppose the government imposes a business levy (a fixed cost) of $500. With this levy: Barbara will produce Barbara will charge a price of Barbara will make a profit of ✓. Note: we're looking for the Barbara receives, not the price consumers pay (which will be ✓ units. ✓. Note: we're looking for the Barbara receives, not the price consumers pay (which will be higher).
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1. A monopolist with cost function c(Q) = faces an inverse demand function given by P(Q) = (a) Find the elasticity of demand with respect to price. (b) Assuming that the monopolist uses MR = MC pricing rule, find his profit maximizing price, p", and output level, q™. (c) Find the marginal cost at q" and calculate the Lerner index. (d) Does the monopolist's market power depend on his cost curve? In particu- lar, does it depend on a? Is your answer surprising?
P₁ P₂ P3 P4 Q₂ Q3 MR Quantity Refer to the graph, which shows the revenue curves for a monopolist. At what output level is demand inelastic? Multiple Choice D=AR Q4
7. A monopolist faces inverse demand p(Q) = 22 - 2Q and has total cost function TC(Q) = 2Q. a. Calculate the equilibrium price, quantity, consumer surplus, and producer surplus if the monopolist must charge all consumers the same price. b. Suppose instead that the monopolist can perfectly price discriminate among consumers. What are the price, quantity, consumer surplus, and producer surplus now? c. Alternatively, the monopolist decides to charge a two-part tariff. What lump sum fee and price per unit should the monopolist charge if consumers are homogeneous?
QUESTION 6 Consider a monopolist with constant marginal cost of 10 and a demand given by D(p) = 250 - 5p where p is the monopolist's price. The monopolist's optimal quantity is 100 and the deadweight loss is 2000. True or False? O True O False
Q14 Monopolists, like firms in other market structure, strive to maximize profit. Microsoft when it first came out with its Windows operating system was thought to be a monopolist. Assume that Microsoft is a monopolist and calculates that at its present output level, marginal cost is $5.50 and marginal revenue is $4.50. Microsoft could increase profits by Multiple Choice decreasing output and leaving price unchanged. increasing price and decreasing output. decreasing price and increasing output. leaving both quatity and price unchanged. decreasing price and leaving output unchanged.
The accompanying graph depicts the marginal revenue (MR), demand (D), and marginal cost (MC) curves for a monopoly a. Place point Pi at the profit maximizing price and quantitvy assuming that the monopolist can only charge a single price. 100 95 90 85 80 75 70 65 2 60 b. What are the profits of the firm if it charges a single price? 50 45 Suppose the monopolist able to successfully price discriminate between two groups by charging one group $60 and charging $35 to the other group. c. What are the firm's profits if it charges the two prices as mentioned above? 35 30 25 20 15 10 MR 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95100 Quantity
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If the monopolist shown in the following figure could implement a two- part tariff, the entry fee would be: $0. $225. $450. $900. $1,200.