3. A monopolist who is the exclusive producer of cricket bats in the UK faces a demand curve defined by P = 100 – 20 and a short-run total cost curve of TC = 300 + 20Q. a. Given the above information, compute total revenue, marginal revenue, and marginal cost for this producer, and identify the optimal quantity, the optimal profit, and the equilibrium price. [10 marks] b. Considering the information from your answer to bullet point a., represent the monopoly market structure graphically.

3. A monopolist who is the exclusive producer of cricket bats in the UK faces a demand curve defined by P = 100 – 20 and a short-run total cost curve of TC = 300 + 20Q. a. Given the above information, compute total revenue, marginal revenue, and marginal cost for this producer, and identify the optimal quantity, the optimal profit, and the equilibrium price. [10 marks] b. Considering the information from your answer to bullet point a., represent the monopoly market structure graphically.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. The demand and total cost functions for a monopoly firm are: Q(P) 20-0.5P TC(Q)=4-Q+0.5 Q² a) Derive the profit maximising Q₁, P, and compute the firm's profit p 'M' M b) Suppose instead a competitive industry where the MC curve is the competitive industry's supply function. Derive the competitive industry equilibrium P* and Q*. c) Drawing on a) and b), use a diagram and algebra to compare the monopoly industry and the perfectly- competitive industry outcomes in terms of a. equilibrium prices and quantities, b. economic efficiency (total economic surplus), and c. distribution in terms of consumer surplus and producer surplus
The following diagram illustrates the demand curve facing a monopoly in an industry with no economies or diseconomies of scale and no fixed costs. In the short and long run, MC = ATC. 1.) Using the point drawing tool, indicate the monopoly output and monopoly price (Monopoly) in the figure to the right. Attach the appropriate provided label. 2.) Using the rectangle drawing tool, shade in monopoly profits (Profit). Attach the appropriate provided label. 3.) Using the triangle drawing tool, shade in the "excess burden" or "welfare costs" of the monopoly (Excess burden). Attach the appropriate provided label. Note: Carefully follow the instructions above and only draw the required objects. The monopoly creates excess burden because O A. it produces where price equals marginal cost. B. it produces an inefficiently large amount of output. O C. it charges a price that is too low. D. it produces where marginal cost is positive. E. it produces where price is above marginal cost. MR Output, Q…
Please see the images of the article below and help answer questions. 1. Evaluate this statement: "Whereas a competitive firm must sell at the market price, a monopoly owns its market, so it can set its own prices. Since it has no competition, it produces at the quantity and price combination that maximizes its profits." Must a perfectly competitive firm sell at a market-clearing price? Alternatively, is the market-clearing price the profit-maximizing price that a competitive firm chooses to set? Can a monopolist set any (price, quantity) combination? 2. Evaluate this statement: "Monopolies drive progress because the promise of years or even decades of monopoly profits provides a powerful incentive to innovate. Then monopolies can keep innovating because profits enable them to make the long-term plans and finance the ambitious research projects that firms locked in competition can't dream of." Cite a counter-example to this claim in which deregulation of a monopolist led to lower…
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