2. A single firm monopolizes the entire market for Batman masks and can produce at constant average and marginal costs of 10. Originally, the firm faces a market demand curve given by Q = 60 - P. a) Calculate the profit-maximizing price-quantity combination for the firm. What are the firm's profits? (Answer: Q=25 units; = = $625) b) Now assume that the market demand curve becomes steeper and is given by: Q=450.5P. What is the firm's profit-maximizing price-quantity combination now? What are the firm's profits? c) Instead of the assumptions in part b, assume that the market demand curve becomes flatter and is given by: Q = 100 – 2P. What is the firm's profit-maximizing price- quantity combination now? What are the firm's profits? d) In each case, compute the demand elasticity for the profit-maximizing price-quantity combination and the markup. Can you find any relationship between the markup and the elasticity? (Answer: Ep₁ =— 1,4; P₁ — MC = 25) e) Graph the three different situations of part a, part b, and part c using just one graph.

2. A single firm monopolizes the entire market for Batman masks and can produce at constant average and marginal costs of 10. Originally, the firm faces a market demand curve given by Q = 60 - P. a) Calculate the profit-maximizing price-quantity combination for the firm. What are the firm's profits? (Answer: Q=25 units; = = $625) b) Now assume that the market demand curve becomes steeper and is given by: Q=450.5P. What is the firm's profit-maximizing price-quantity combination now? What are the firm's profits? c) Instead of the assumptions in part b, assume that the market demand curve becomes flatter and is given by: Q = 100 – 2P. What is the firm's profit-maximizing price- quantity combination now? What are the firm's profits? d) In each case, compute the demand elasticity for the profit-maximizing price-quantity combination and the markup. Can you find any relationship between the markup and the elasticity? (Answer: Ep₁ =— 1,4; P₁ — MC = 25) e) Graph the three different situations of part a, part b, and part c using just one graph.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.3P

See similar textbooks

Similar questions

Qus 5
Please no written by hand solutions 1. Assume the cost function for a monopolist is given by TC(q) = 30Q; the inverse demand function for the firms' output is p = 120 - Q, where Q is the total output. a. Find the profit-maximizing combination of price and quantity b. Estimate consumer surplus, producer surplus and the deadweight loss associated with this monopolist C. If this industry became perfectly competitive, explain and estimate the consumer surplus, producer surplus and deadweight loss of the industry d. Graph your answers for a, b, and c 2. Now assume that the monopolist above splits into two. Each of two firms has the cost function TC(q) = 30q. a. What are the firms' outputs in a Nash equilibrium of Cournot's model? b. Estimate the economic profits for each firm c. If firm 1 is the leader and firm 2 the follower, find the equilibrium outputs for the Stackelberg solution.
Typed answer only
Suppose MPH Book Store is the only bookstore in the Kota Warisan area near XMU. Figure 3 shows the demand curve for economics books and MPH's Book Store marginal revenue (MR) curve and marginal cost (MC) curve. MPH's Book Store will maximize its profit and set the price of the economic book equal to and has a total annual revenue of 100 80 60 MC 40 20 D MR 20 40 60 80 100 120 Quantity (units per day) Figure 3 O a. $40, $1,600 O b. No correct answer O c. $60; $1,200 O d. $40; $800 Price and costs (dollars per unit)
Price (Dollars per Garment) 7 D E 5 АС-МC Demand Marginal Revenue 20 Garments cleaned per year (millions) The long run average and marginal cost of dry-cleaning services is $5, as shown in the graph. Given the demand curve and the marginal revenue curve shown in the graph, which of the following is true? Select one: O . If the industry were served by a profit-maximizing monopoly, the price of dry-cleaning services would be $7 per garment. Ob. If the industry were perfectly competitive, 10 million garments would be cleaned each year. If the market were served by a profit-maximizing monopoly, the price of dry-cleaning services would be $5 per garment and monopoly economic profit would be zero. O d. If the industry were perfectly competitive then the long-run equilibrium price of dry-cleaning services would be $7 per garment.
WEBCAM RECORDING Industrial Economics da 6 A market is characterised by an inverse demand curve p =8 – 2Q where Q is total quantity. Two firms, A and B, are competing à la Cournot and TCA(qA) = 29A and TCB(qB) = q ta non %3D data Total profits n (1.e. the sum of profit for the two firms) are equal to: ggio max. ontrassegna O (a)n = nda %3D O (b) = 16 O (c)N = 4 O (d) = 9 Precedente Successivo
2. Suppose the cost function for a monopoly is given by TC =F+c.q where TC is the total cost, F is the fixed cost and q is the output of the firm. The demand function for the monopoly is given by q = A-bP where A > 0 and b > 0. Find out the profit maximizing price, quantity, and profit for the monopoly. Also find out the expression for the marginal revenue of the monopoly as well as the elasticity of demand facing the monopoly.
Suppose a firm is a monopoly. Its marginal cost curve is flat, and its average cost curve is downward sloping (because it has a fixed cost). 1.) Using the point drawing tool, indicate the monopoly's profit-maximizing price and quantity in the figure if it cannot price discriminate. Label this point' e,. '2.) Using the rectangle drawing tool, indicate the monopoly's losses at the no price discrimination profit-maximizing price and quantity. Label this rectangle 'Losses,. 3.) Using the point drawing tool, indicate the monopoly's profit-maximizing quantity in the figure if it perfectly price discriminates and the price charged for the last unit produced. Label this point' e2. '4.) Using the triangle drawing tool, indicate the monopoly's producer surplus with perfect price discrimination. Label this triangle PS, . ' Carefully follow the instructions above, and only draw the required objects. 2 Suppose a firm is a monopoly. Its marginal cost curve is flat, and its average cost curve is…
Pls help with below homework.
2) The diagram below gives the demand for a new pharmaceutical in both the US and in India. Find the profit maximizing price and quantity in both markets assuming the firm can perfectly price discriminate between markets. In reality, what is one reason why the firm may NOT be able to price discriminate, instead preferring to charge a single price in both markets? Dus MC MC Dassa
please help with C
Explanation it correctly