2. The following table provides the demand facing a monopolist for a unique product. Qty of Price $20 SI8 $16 $14 $12 $10 6. S8 $6 a.) Calculate Total Revenue (TR) and Marginal Revenue (MR). Why is MR less than price? b.) Suppose there is no fixed cost and the marginal cost (MC) of production and Average total cost (ATC) is constant at $6 per pound. What is the quantity and price chosen by the monopolist? What is the profit carned by the monopolist?

2. The following table provides the demand facing a monopolist for a unique product. Qty of Price $20 SI8 $16 $14 $12 $10 6. S8 $6 a.) Calculate Total Revenue (TR) and Marginal Revenue (MR). Why is MR less than price? b.) Suppose there is no fixed cost and the marginal cost (MC) of production and Average total cost (ATC) is constant at $6 per pound. What is the quantity and price chosen by the monopolist? What is the profit carned by the monopolist?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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11. A monopolist is faced with the following cost and revenue curves: (a) What is the maximum-profit output? 80 MC (b) What is the maximum-profit price? 70 (c) What is the total revenue at this price and output? 60 50 AÇ (d) What is the total cost at this price and output? 40 30 (e) What is the level of profit at this price and output? 20 AR () If the monopolist were ordered to produce 300 units, what would be the market price? 10 100 200 300 403 500 600 (2) How much profit would now be made? -10 MR (h) If the monopolist were faced with the same demand, but average costs were constant at £60 per unit, what output would maximise profit? -20 Quantity What would be the price now?. How much profit would now be made?. (k) Assume now that the monopolist decides not to maximise profits, but instead sets a price of £40. How much will now be sold? O What is the marginal revenue at this output? (m) What does the answer to (1) indicate about total revenue at a price of £40? (n) What is the price…
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…
Imperfect Competition
3. A monopolist faces demand p(Q) = 65 - 2Q and has total cost TC (Q) = 100 +5Q+Q². a. Calculate price, quantity and (producer and consumer) surplus under perfect competition. b. Determine the profit-maximizing price, quantity, and profit for the monopolist. d. c. Calculate consumer surplus, producer surplus and deadweight loss under monopoly. How would a price ceiling of $27 affect price, quantity, producer and consumer surplus, and deadweight loss?
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Price and co (dollars per hamburger) 5.00 4.30 4.00 330 3.00 2.50 2.00 1.30 MC X 1.00 0.50 MR D 0 10 20 30 40 50 Quantity (hamburgers per hour) Suppose the Busy Bee Café is the monopoly producer of hamburgers in Hugo, Oklahoma. The above figure represents the demand, marginal revenue, and marginal cost curves for this establishment. What quantity will the Busy Bee produce per hour in order to maximize its profit? OA. 20 OB. 10 O C. 50 OD.30
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8. Amonopolist has a cost function C(q) =– The monopolist faces a market demand curve given by q = 10 – p. a. Find marginal cost. b. Calculate the profit-maximizing price-quantity combination for the monopolist. Also calculate the monopolist's profits. c. What output level would be produced by this industry under perfect competition? d. Calculate the consumer surplus obtained in case (c). Show that this exceeds the sum of monopolist's profits and the consumer surplus received in case (b). What is the value of the deadweight loss from the monopolization? Hint: The area of a triangle is 0.5 * base * height.
Figure 94 Monopolist (dollars) 10 8 6 0 Quantity MC Refer to Figure 94. Suppose that the profit-maximizing/loss minimizing level of output is 40 units per day and the average fixed cost and average variable cost of producing this amount is $4 $7, respectively. (a) What is the total cost of producing 40 units per day? Show your work. (b) What is the total profit earned/loss incurred by producing 40 units per day? Show your work. (c) What price will the firm charge to maximize profit or minimize loss? (d) Should the firm shut down or continue to produce in the short run? Explain.
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Sol-Motors is the only auto manufacturer in West Lidia, a country that prohibits the importation of cars. The graph below shows the demand and the costs for Sol-Motors. Costs and revenues (in thousands) 130 120 110 100 90 80 70 60 50 40 30 20 10 0 Price: $ 15. 45 75 9010512013550165180195 30 60 Quantity per period (in thousands) MC D thousands a. Add the marginal revenue curve to the graph above (starting at zero). Plot only the end points. b. What are Sol-Motors' profit-maximizing output and price? Output: thousands Tools MR K c. Suppose that the government of Lidia imposes a price ceiling of $35,000 per car. What is the firm's profit-maximizing output now? Profit-maximizing output: thousands d. What would be the output if the graph represented a perfectly competitive industry rather than a monopoly? Output: thousands