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

See similar textbooks

Similar questions

Item 7 Suppose a monopolist’s profit-maximizing output is 400 units per week and that the firm sells its output at a price of $40 per unit. The firm has total costs of $8,000 per week. Assume the monopolist is maximizing its profit and earns $20 per unit from the sale of the last unit produced each week.
Question 4 Think a price making firm (monopolist) with a downward-sloping demand curve is one with a price elasticity of demand equal to-1. This is illustrated in the following diagram. P=AR 20 Expenditure stays the same as price changes TR AR = = Q d (TR) dQ Slope = b/Q 40 100 Diagram 5 Unit elastic demand (Pe=-1) MR = As price and quantity change by the same proportion, total revenue is the same at each price (the TR curve is horizontal). This gives the following TR, AR and MR equations: TR=b b -D (AR) Q = 0 Q As TR is constant at all outputs, so MR must equal zero. In diagram 5, what is the value of b in equation TR=b?
Figure monopolist, to answer questions a-c. a. indicate the profit maximizing price and output level and label them P 1 and Q 1. b. Shade in the area that represents the firm's economic profit (or loss). c. If this firm wished to discourage entry by other firms it could produce the output level at which it earns only a zero economic profit. Indicate the price and output level associated with a zero economic profit and label them P 2 and Q 2.
6
Please help with the following question.
Consider a market with homogeneous consumers. Compare a monopolist who is charging a uniform price with a monopolist who is using two-part tariff. In which case the mo- nopolist’s profit is higher? What about the social welfare (sum of the consumers’ surplus and the monopolist’s profit)?
.
Suppose you are a monopolist and you have two customers, A and B. Each will buy either zero or one unit of the good you produce. A is willing to pay up to $35 for your product; B is willing to pay up to $10. You produce this good at a constant average and marginal cost of $8. If you could not engage in third-degree price discrimination, what price would you charge? OA $10. OB. $15. OC. $35. OD. $45. If you could practice third-degree price discrimination, you will earn a profit of $ (For simplicity, assume that if a consumer is indifferent between buying and not buying, he will buy.) Click to select your answer(s)
6. Consider a monopolist facing a linear inverse demand curve p(q) = a bg, where q denotes units of output and b > O represents the slope of the inverse demand curve. This rm faces cost function C (q) = F + cg, where F denotes its xed costs (can contain sunk costs), c represents the monopolist s (constant) marginal cost of production and assume a >с 0. a. Find the monopolist's profit maximizing output and label it Verify if it is positive. b. What is the market price pm and the profit level Tm? Is the profit level always positive? If not what is the condition for the profit level to be positive? Explain c. Find the absolute value of the price elasticity of demand Is the elasticity greater than one? Find the markup on price or Lerner index, defined as p(q)-C'(q) evaluated at qm as defined in the textbook. L (q) p(q) at gm. What happens with L when n increases? Is it true that "A proft maximizing monopolist decreases its markup as demand becomes more price elastic. Explain. d. Find the…
. Let the demand curve for a monopolist’s product be P = 100 – 2Qd and the marginal cost of production be constant at MC = 10. Suppose that the firm considers moving from a uniform pricing strategy to a two-block tariff where the first block provides 15 units at a price of P1 = $70 and the second block provides an additional 15 units at a price of P2 = $40. How much does the monopolist’s profit rise with this scheme?
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…
In Figure 12-3, one can tell from the graph that the monopolist will earn a positive profit only if с d the price exceeds $2. Figure 12-3 output is less than 60 units. N Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. the price exceeds $3. 50 One cannot tell from the information given. 60 MR MC X Your answer