2. A monopolist faces demand p = 10-Q and has costs TC = 10 + 2q. a. Provide expressions for marginal revenue and marginal cost. b. Maximize the firm's profit to determine the equilibrium price, quantity, and profit. The monopolist faces the prospect of entry by competitor with the same cost function. If the firm enters, they will compete by choosing quantities. Does the monopolist need to worry about this entry threat? Explain. d. The government is considering a subsidy of 4 for all firms in this industry. Should the monopolist support or oppose this policy? Explain.

2. A monopolist faces demand p = 10-Q and has costs TC = 10 + 2q. a. Provide expressions for marginal revenue and marginal cost. b. Maximize the firm's profit to determine the equilibrium price, quantity, and profit. The monopolist faces the prospect of entry by competitor with the same cost function. If the firm enters, they will compete by choosing quantities. Does the monopolist need to worry about this entry threat? Explain. d. The government is considering a subsidy of 4 for all firms in this industry. Should the monopolist support or oppose this policy? Explain.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: A monopolist’s cost function yields constant average and marginal costs, with AC = MC = 5. Thefirm…

A: Hi there! Thankyou for the question. Since we only answer up to 3 sub-parts, we will answer the…

Q: Suppose that a monopolistic seller of flux capacitors faces the inverse demand curve P = 40 - 0.5Q,…

A: A monopoly is a type of market structure when a single manufacturer or seller of a particular good…

Q: A. If the Demand for a monopolist's good shifts out, what happens to the equilibrium price and…

A: According to guidelines, only first question is to be attempted. The question pertains to the…

Q: A monopolist has two types of customers. There are 100 of Type A, who will each pay up to $10 for a…

A: Making business decisions and allocating resources in the face of business issues is part of…

Q: You are the manager of a monopolist. Assume that the demand curve of the firm is linear, and the…

A: Answer-

Q: Show, on a single diagram, how a monopolist's profit maximisation can be represented in terms of an…

A: Iso profit curve refers to the profit level at the given prices which is equivalent to the firm's…

Q: Price MC 7. 6 D 3 MR Demand 9 10 11 12 Ouartin

A: Monopolistic Competition may be a market condition within which there area unit several vendors of…

Q: A monopolist faces a demand equation given by P=20−Q�=20−�, a marginal revenue equation given by…

A: The objective of the question is to find the profit-maximizing price set by a monopolist. The…

Q: A firm with market power is producing a level of output at which price is $10, marginal revenue is…

A: ***Since the student has posted multiple questions, the expert is required to solve only the first…

Q: Suppose both a monopolist and a perfectly competitive firm charge a price corresponding to the…

A: The question is based on the shutdown rule.

Q: The figure below shows the cost (MC, ATC, AVC) and demand curves (D, MR) for a monopolist producing…

A: Average total cost refers to the approximate total cost of production at different levels of…

Q: Suppose a monopolist faces a demand equation given by P=20-Q, and a marginal revenue equation given…

A: Given MR = 20 – q MR = 20 – 2q MC = AVC = ATC = 6 $

Q: Problem 3 Consider a country called Midwest and is run by a monopolist. Market demand is P = 35 –…

A: "Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: Suppose a monopolist has the following cost function C(Q) = 40Q (with marginal cost MC = 40).…

A: Under the monopoly market, the firm maximises its profit when the marginal revenue is equal to the…

Q: where mc intersects d, price, ~3.25, output= ~5.75 b. How much profit does the monopolist earn?

A: Where MR = MC, the monopolist will choose the profit-maximizing level of output. Then, for that…

Q: When comparing a perfectly competitive firm and a (single-price) monopolist, a major difference i…

A: Perfect competition refers to a market condition at which there are many seller and buyers dealing…

Q: At the profit maximizing output, for the monopolist, options: price is greater than marginal…

A: Monipolist is a single seller in the market selling unique good.

Q: How is it possible for monopolists to earn profits in the long run? options: Because the…

A: The monopolist is a solitary seller for a specific commodity and faces an inelastic demand bend. The…

Q: tion c

A: The profit maximizing level of output for a monopolist is at point where MR is equal to MC Given MR…

Q: A monopolist firm faces a demand with constant elasticity of -1.3. It has a constant marginal cost…

A: When a single seller produces something that has no near equivalent, there is no competition in the…

Q: Use the following words to fill in the blanks: price, price, economic profit, marginal benefit,…

A: In a perfectly competitive market, the prices are determined by the market forces of demand and…

Q: For a firm in a perfectly competitive market, its marginal revenue a) is constant with respect to…

A: Answer: (1). Correct option: a (is constant with respect to the quantity produced) The marginal…

Q: Refer to the scenario above. The monopolist profit is maximized when the quantity sold is____ packs.…

A: Marginal revenue refers to the additional revenue that a seller receives from selling an extra unit…

Q: Let the market demand curve be P = 70 - 2Q, and assume all sellers can produce at a constant…

A: a. For a monopolist, the profit-maximizing level of output is where marginal revenue (MR) equals…

Q: 3. Suppose that the elasticity of demand is e= -1.5 at every point on the demand curve and that a…

A: An elastic demand is one in which the change in quantity demanded due to a change in price is large.…

Q: c. Now suppose that the monopolist can perfectly price discriminate. What quantity will it produce?…

A: Perfect price discrimination monopolist produces such quantity where price equals marginal cost and…

Q: The accompanying graph depicts the marginal revenue (MR), demand (D), and marginal cost (MC) curves…

A: Monopoly Market:Monopoly market is a market condition where single firm reaping largest market share…

Concept explainers

Price Discrimination

Price discrimination or differential pricing is based on the principle that the seller will charge the buyer a price based on the buyer’s ability and willingness to pay for the product rather than applying uniform pricing for all.

Question

2. A monopolist faces demand p = 10 - Q and has costs TC = 10 + 2q.
a. Provide expressions for marginal revenue and marginal cost.
b. Maximize the firm's profit to determine the equilibrium price, quantity, and profit.
c. The monopolist faces the prospect of entry by competitor with the same cost
function. If the firm enters, they will compete by choosing quantities. Does the
monopolist need to worry about this entry threat? Explain.
d. The government is considering a subsidy of 4 for all firms in this industry. Should
the monopolist support or oppose this policy? Explain.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Monopolist and Monopoly market

VIEW

Step 2: Marginal Revenue and Marginal Cost

VIEW

Step 3: Equilibrium Price, quantity and profit

VIEW

Step 4: Competition threat

VIEW

Step 5: Subsidy of 4 for all firms in the industry

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 6 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

2. Given the demand curve of the monopolist Q = 60 - 2P and the cost function of the monopolist TC = 50-4Q+ 0.5 Q^{2}, Then find: A. The inverse demand function, average revenue, the marginal revenue functions, marginal cost function? B. Find the level of output and price that maximizes the monopolist profit? C. The level of profit at equilibrium. D. Show graphically profit maximization level of output?
What is meant by the term “market power”? Can a monopolist charge any price it wants because it is the only seller? What is the profit maximizing /loss minimizing rule a firm should follow regardless of the market structure within which the firm is operating? If the monopolist is incurring a short run economic loss, what are some options the monopolist has?
Please describe each step to solve the problem presented below:
Assume a monopolist with downward-sloping demand and marginal revenue (MR) curves. The monopolist operates with standard marginal cost (MC) and average total cost (ATC) curves. How does a monopolist determine the profit-maximizing output level and the corresponding profit-maximizing price? A. The output level occurs where MR-MC and price is determined from the demand curve at this output level OB. The output level occurs where Demand = MC and price is determined from the marginal revenue curve at this output level. OC. Both the output level and price are found where MR = MC. OD. Both the output level and price are found where Demand = MC.
1. Consider a monopolist where the market demand curve for the produce is given by P = 520 2Q. This monopolist has marginal costs that can be expressed as MC = 100 + 2Q and total costs that can be expressed as TC = 100Q + Q2 + 50.a. Given the above information, what is this monopolists profit maximizing price and output if it charges a single price?b. Given the above information, calculate this single price monopolists profit.c. At the profit maximizing quantity, what is this monopolists average total cost of production (ATC)?
Which one of the following is the best description of a monopolist? a.a firm that is the sole producer of a product for which there are no good substitutes in a market with high barriers to entry b.a firm that is the sole producer of a narrowly defined product class, such as yellow, grade-A butter produced in Wisconsin c.a firm that is large relative to its competitors d.a firm that produces a single product
monopolist’s profit-maximizing output is 500 units per week and it sells its output at a price of $70 per unit. The firm’s total costs are $15,000 per week. The firm is maximizing its profit, and it earns $40 in extra revenue from the sale of the last unit produced each week. a. What are the firm's weekly economic profits?
Use the graph to answer the following 5 questions. A single priced unregulated monopolist faces the demand curve and has the cost curves illustrated in the diagram below. 1. What is the profit Price maximizing quantity of output? 70 a) 25 units. b) 40 units. c) 50 units. d) 60 units. 60 e) 70 units. f) 80 units g) 90 units Marginal Cost 50 2. What price does this monopolist charge? a) $58 b) $20 40 Average Total Cost c) $35 d) $30 e) $45. f) $50 30 g) $40 h) $38 3. What are the total profits? a) $1200 b) $0 c) $1250 d) $200 e) $250. f) $2250. g) $150 h) $1600 20 10 Demand 20 40 60 80 100 120 140 160 Quantity
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.
Suppose that the monopolist's demand is: P = 8 – Q, and marginal revenue is: MR = 8 – 2Q. - The marginal cost is: MC = 2, and there is no fixed cost. a.Find out the profit maximizing output level. b.Specify the amount of economic profit or loss at the profit maximizing output. c.Calculate the price elasticity of demand at the profit maximizing point and explain it.
The diagram below shows a monopolist’s marginal cost scheduleand the demand curve. Find and depict the following items within the diagram and briefly explainhow you found them: a) The efficient (i.e., total surplus maximising) quantity. b) The monopolist’s profit maximising quantity. c) The monopolist’s profit maximising price. d) The monopolist’s optimal profit. e) The deadweight loss.
1. A monopolist can earn above-normal profit in the long-run. a. True b. False 2. If a monopolist cannot make an above-normal profit, entry by other firms will occur. a. True b. False 3. A monopolist can charge whatever price it wants and, therefore, can reap phenomenal profits. a. True b. False