4) Consider a monopolist who faces the inverse demand function p = 1 – Y and mnarginal revenue MR = 1 – 2y a) Find the price elasticity of demand. as a function of y using the elasticity formula Ay p Дру Price elasticity of Demand b) Set up the profit function when the monopolist faces the cost c(y) = y/2 (marginal cost=1/2) and c(y) = y² (marginal cost =2y) c) Calculate the value of y for each cost function. d) What is the elasticity at the monopolists choice of output for each cost function. That is what is the value of the price elasticity of demand for the function you calculated above (All you have to do is plug the y you calculated into the function you derived above) e) What is the efficient price for each cost function? (Hint:What is an efficent price in a perfectly competitive market) f) What is the deadweight loss generated by the monopolist for each cost function? Show this graphically.
4) Consider a monopolist who faces the inverse demand function p = 1 – Y and mnarginal revenue MR = 1 – 2y a) Find the price elasticity of demand. as a function of y using the elasticity formula Ay p Дру Price elasticity of Demand b) Set up the profit function when the monopolist faces the cost c(y) = y/2 (marginal cost=1/2) and c(y) = y² (marginal cost =2y) c) Calculate the value of y for each cost function. d) What is the elasticity at the monopolists choice of output for each cost function. That is what is the value of the price elasticity of demand for the function you calculated above (All you have to do is plug the y you calculated into the function you derived above) e) What is the efficient price for each cost function? (Hint:What is an efficent price in a perfectly competitive market) f) What is the deadweight loss generated by the monopolist for each cost function? Show this graphically.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question is in attached image. Thank you!
Only answer D,E,F
![4) Consider a monopolist who faces the inverse demand function p = 1 – y
and mnarginal revenue MR = 1 – 2y
a) Find the price elasticity of demand. as a function of y using the elasticity
formula
Ay p
Дру
Price elasticity of Demand
b) Set up the profit function when the monopolist faces the cost c(y) = y/2
(marginal cost=1/2) and c(y) = y² (marginal cost =2y)
c) Calculate the value of y for each cost function.
d) What is the elasticity at the monopolists choice of output for each cost
function. That is what is the value of the price elasticity of demand for the
function you calculated above (All you have to do is plug the y you calculated
into the function you derived above)
e) What is the efficient price for each cost function? (Hint:What is an efficent
price in a perfectly competitive market)
f) What is the deadweight loss generated by the monopolist for each cost
function? Show this graphically.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdfedcf45-36f9-41dd-be80-a8990833e266%2Fb06cb192-8317-4316-8f8f-634b7e68e5a8%2F7n1vekh_processed.png&w=3840&q=75)
Transcribed Image Text:4) Consider a monopolist who faces the inverse demand function p = 1 – y
and mnarginal revenue MR = 1 – 2y
a) Find the price elasticity of demand. as a function of y using the elasticity
formula
Ay p
Дру
Price elasticity of Demand
b) Set up the profit function when the monopolist faces the cost c(y) = y/2
(marginal cost=1/2) and c(y) = y² (marginal cost =2y)
c) Calculate the value of y for each cost function.
d) What is the elasticity at the monopolists choice of output for each cost
function. That is what is the value of the price elasticity of demand for the
function you calculated above (All you have to do is plug the y you calculated
into the function you derived above)
e) What is the efficient price for each cost function? (Hint:What is an efficent
price in a perfectly competitive market)
f) What is the deadweight loss generated by the monopolist for each cost
function? Show this graphically.
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