3. Durable goods monopolylow and high valuation groups - whoseSuppose a monopolist faces two groups of consumerswillingness to pay are described below. The monopolist can sell the durable product over twoperiods. Assume the discounting factor 8 = 0.9 (i.e., a dollar in the second period is only worthninety cents in the first period).Low valuation consumer High valuation consumerWillingness to pay25303.1. If the monopolist sets the same price across two periods, what is the optimal price and profit?3.2. Suppose the monopolist sets different prices across two periods in order to sell to the highvaluation consumer in the first period and to the low valuation consumer in the second period.What are the optimal prices and profit?3.3. Which strategy3.1. or 3.2.yields more profit for the monopolist? Why?

3.1 In a monopoly, the profit-maximizing level occurs where the Marginal Revenue (MR = MC) equals…

Answered: 3. Durable goods monopoly low and high…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Q20 With regard to price discrimination, we can generally say that a monopolist practicing perfect price discrimination _____ a single-price monopolist in the same market. a. Produces the same output level and charges the same price as. b. Produces a lower level of output compared to. c. Generates more consumer surplus than. d. Generates a more efficient outcome for society as a whole compared to. e. Has the same effects on consumer welfare as.
1. Refer to the figure below when the firm is a monopolist. Price P MC L K J ATC D T W Quaxtity \MR a) If the monopolist maximizes profit, how many units will it produce? b) What price will the monopolist charge? c) What area measure the monopolist's profit? d) What level of output would be socially efficient? 2. A Monopolist is facing a demand schedule that is shown in the following table. Quantity Total Revenue Average Revenue Marginal Revenue Price $35 $32 1 2 3 $29 14 $26 15 $23 $20 $17 $14 6 7 18 19 $11 10 $8 a) Fill out the rest of the table. b) Assume this monopolist's marginal cost is constant at $11. What quantity of output (Q) will it produce and what price (P) will it charge? ------
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.
1 Suppose that a monopolist has a patent for widgets and the market demand curve Q(P) is:Q(P) = 60 – 2P,where P is the price in dollars and Q is quantity. a. Solve for the inverse demand P(Q) curve by solving the demand curve for P in terms of Q. b. Using your answer from (a), express the monopolist’s total revenue in terms of Q as TR(Q) = QP(Q). c. Calculate the monopolist’s marginal revenue MR(Q) by differentiating the total revenue you found in theprevious step: MR(Q) = dTR(Q) / dQ. PLEASE SHOW ALL WORK
10
Consider a market with homogeneous consumers. Compare a monopolist who is charging a uniform price with a monopolist who is using two-part tariff. In which case the mo- nopolist’s profit is higher? What about the social welfare (sum of the consumers’ surplus and the monopolist’s profit)?
1
Price Quantity $10 5 $9 10 16 $8 $7 $6 23 31 $5 45 52 $4 $3 60 A monopolist faces the demand schedule above. If the monopolist faces a constant marginal cost of $6, how much output should the monopolist produce in order to maximize profit? 10 units and it should charge a price of $8 16 units and it should charge a price of $6 16 units and it should charge a price of $8 10 units and it should charge a price of $9
The diagram at right shows the demand curve, marginal revenue curve, and cost curves for a single-price monopolist that owns the only golf courses on Eagle Island. The monopolist's product is 18-hole golf games. a. Now suppose the monopolist is able to charge a different price on each different unit sold. What would be the total number of rounds of golf sold per week? rounds. (Round your response to the The total number of rounds sold per week is 600 nearest whole number) What would be the price on the last round sold? The price on the last round sold is $200 (Round your response to the nearest dollar) b. What is the value of the consumer surplus if the monopolist cannot price discriminate at all? The value of the consumer surplus is $ 40000 (Round your response to the nearest dollar) c. What is the value of the consumer surplus when the monopolist is practicing this "perfect price discrimination? The value of the consumer surplus is $ (Round your response to the nearest dollar) Price…
Answer to the question and reasoning involved please
2. A monopolist sells tours of a stately Montana home to two groups of consumers, Montanans (M) and others (O). The monopolist knows the total demand for group O, which is Qo=100-2P, and the total demand for group M, which is QM =80-2P. The monopolist is able to identify consumers by inspecting their IDs and can thus apply third-degree price discrimination. The monopolist's cost function is C(G) = 4Q + 20. a. What price will the monopolist charge for group O? What price will the monopolist charge for group M? What is the monopolist's total profit? For the next questions assume that it has become illegal to charge different prices and thus the monopolist must charge the same price to everybody. b. Write down equations representing (1) aggregate demand and (2) marginal revenue at all possible prices. Find the profit maximizing price and output. Will both O's and M's purchase tours, or only one or the other? c. Suppose that the monopolist charges $44. What is total consumer surplus at…
What is the elasticity of demand for the demand curve Q = 10 – 5P when P=1?

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