46 a) Consider a monopoly with the demand curve and marginal cost curve as shown in thefollowing diagram.MCQSuppose the monopolistic firm is earning positive economic profit. Explain clearly withnecessary illustrations using this diagram how each of the following governmentinterventions will affect the market equilibrium, consumer surplus, producer surplus anddeadweight loss.) The government imposes a lump-sum tax on its output.(i) The government imposes a per-unit tax on its output.b) Suppose the purpose of the government interventions in (a) is to increase consumer surplusand reduce deadweight loss. Based on your answers to (a), explain whether these policies willbe effective.

Meaning of Monopoly: The term monopoly refers to the situation under which there is only an…

Answered: 4.6 a) Consider a monopoly with the…

ENGR.ECONOMIC ANALYSIS

14th Edition

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Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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Monopoly. A monopolist sells to a population of consumers with willingness to pay that is uniform between 5 and 10. That is: f1/5 if 5 <2< 10 S(w) = O else You can assume the amount of consumers is normalized to 1 like in class. The monopolist has constant marginal cost c.
1. In the market for steel pots for boiling water, the supply curve is the typical upward-sloping straight line, and the demand curve is the typical downward-sloping straight line. The equilibrium quantity in the market for steel pots is 200 per month when there is no tax. The government imposes a tax of Rs.5 per steel vessel. As a result, the government is able to raise Rs.800 per month in tax revenue. a. Please, specify new equilibrium quantity of steel pots (after tax) b. Draw a graph to show the new and old equilibrium quantity and the tax revenue (before and after-tax) C. Suppose you are told that the equilibrium price was Rs.100 when the tax was not imposed. With the tax now the buyer pays Rs.103 and the seller receives Rs.98. What is the loss in consumer and producer surplus? Show it on the graph. d. What is the loss in welfare? Explain. e You advise the government that instead of a tax on steel pots they should impose the tax on the steel industry to minimize the welfare loss.…
9
1. How much output would a monopoly firm produce? 2. What price would the monopoly firm charge? 3. Consider the deadweight loss with the monopoly.How large is the loss to consumer surplus under thismonopoly?
ATC MC, $59 $50 $45 $38 $35 $26 $12 ........ MR 38 74 82 90 Refer to the figure above. It illustrates a monopoly market. Suppose the monopolist wants to maximize its profit. What price should the monopolist charge? Select one: O a. $35 Ob. $82 Oc. $50 O d. $45
3. Assume inverse demand function for game console in an imaginary country is P=1200-4Q and the total cost function is TC=400+4Q². Government put $120 of specific tax on production. a. If the market is competitive what is the incidence of tax on consumer? b. If the market is monopolist what is the incidence of tax on consumer?
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1. Asssume the following equations describe the conditions for an unregulated monopoly: Qd = q = 25,000 -100P or P = 250-0.01q TC = 480,000 + 70q + 0.005q2 where Qd is the quantity demanded for the firm, P is the commodity's price in dollars, TC is total cost in dollars, and q is the quantity of output produced. Based upon the above equations, answer the following questions: a. What is the firm's profit maximizing quantity of output? b. What price will the firm charge for the commodity c. What does the firm's total economic profit equal? d. What is the amount of deadweight loss that exists given the monopoly is unregulated? Assume the government is now going to regulate this monopoly, and the regulators want to guarentee the monopolist produces the socially optimal quantity of output. e. What is the socially optimal quantity of output? f. What price would regulators establish to guarantee the monopolist produces the socially optimal quantity of output? g. What does the firm's…
Which area represents the producer surplus?
3 6 A10. REFER TO FIGURE 4 The price charged by the profit-maximising monopolist is: a. 14 b. 12 c. 8 d. 6 e. 3 Market Price 12 14 42 8 00 30 35 MR 50 في (၂ LRMC AR AR LRAC Quantity Demanded
TPrice 30 MC 23 20 15 ATC D 9 12 Qiucantiry \MR b) Determine the deadweight loss for this market. Why does a deadweight loss arise in a monopoly?

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