2. Many schemes for price discrimination involve some cost. For example, discount take the time and resources of both the buyer and the seller. This question coupons considers the implications of costly price discrimination. To keep things simple, let's assume that our monopolist's production costs are simply proportional to output so that average total cost and marginal cost are constant and equal to each other. a. Draw the cost, demand, and marginal-revenue curves for the monopolist. Show the price the monopolist would charge without price discrimination. b. In your diagram, mark the area equal to the monopolist's profit and call it X. Mark the area equal to consumer surplus and call it Y. Mark the area equal to the deadweight loss and call it Z. c. Now suppose that the monopolist can perfectly price discriminate. What is the mononolist's profit? (Giye your answer in terms of X, Y, and Z.) up

2. Many schemes for price discrimination involve some cost. For example, discount take the time and resources of both the buyer and the seller. This question coupons considers the implications of costly price discrimination. To keep things simple, let's assume that our monopolist's production costs are simply proportional to output so that average total cost and marginal cost are constant and equal to each other. a. Draw the cost, demand, and marginal-revenue curves for the monopolist. Show the price the monopolist would charge without price discrimination. b. In your diagram, mark the area equal to the monopolist's profit and call it X. Mark the area equal to consumer surplus and call it Y. Mark the area equal to the deadweight loss and call it Z. c. Now suppose that the monopolist can perfectly price discriminate. What is the mononolist's profit? (Giye your answer in terms of X, Y, and Z.) up

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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**You only need to answer Question C*
1. A monopolist can produce at constant average and marginal costs of AC=MC=5. The firm faces a market demand curve given by Q = 53 – P. a. What is the value of the "deadweight loss" from monopolization? %3D
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?
3. A monopolist movie streaming service has two kinds of movies in its library - Action (A) and Romantic Comedies (R). Demand: There are two groups of consumers (Group X and Group Y) for the streaming service with the following value for each movie genre: Genre A Value Group X $100 Group Y $80 Value Group X $50 Group Y $70 Cost: The cost of streaming each type of content is MCA = $0, MCR = $60. Efficient Outcome a) Describe the efficient outcome by filling the table below Should X consume? (Y/N) Should Y consume? (Y/N) Consumption of A Consumption of R Total Efficient Surplus Genre R Surplus from efficient consumption (Value - Cost)
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)?
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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.
Q)Economics A market comprises two consumers groups: high-demand types and low-demand types. The high types have demand QH = 10 – P and low types have demand QL = 8 – P. If a monopolist has marginal cost MC = 1 + Q, what is the profit maximising price the monopolist would charge if they are not able to price discriminate? a. 5 b. 6 c. 4 d. 7
2. A monopoly sells its good in Country A, where the elasticity of demand (in absolute value) is 2, and in Country B, where the elasticity of demand (in absolute value) is 3. Its marginal cost is $20. Determine what price does the monopoly sells its good in each country if the monopolist is able to price discriminate. How and why does the price depend on the elasticity of demand?
In each of the following cases, state whether the monopolists would increase or decrease output. a. MR>MC at the level of output being produced b. MR<MC at the level of output being produced
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