5. Suppose a company has a monopoly on a game called Monopoly andfaces a demand curve given by QT = 100-P and a marginal revenue functiongiven by MR = 100 - 2QT where QT equals the combined total number ofgames produced per hour in the company's two factories (QT = 91 +92). Iffactory 1 has a marginal cost function given by MC₁ = q1-5 and factory2 has a marginal cost function given by MC2 = 0.592-5, how much totaloutput will the company choose to produce and how will it distribute thisproduction between its two factories in order to maximize profits?

Given:Demand: Qt = 100 - PMR = 100 - 2QtQt = q1 + q2MC1 = q1 -5MC2 = 0.5q2 - 5 Remember that a…

Answered: 5. Suppose a company has a monopoly on…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A patent gave Sony a legal monopoly to produce a robot dog called Aibo. The Chihuahua-size pooch robot can sit, chase balls, dance, and play an electronic tune. When Sony started selling the toy in July 1999, it announced that it would sell 3,000 Aibo robots in Japan for about $2,000 each and a limited litter of in the United States for $2,500 each. Suppose that Sony's marginal cost of producing Aibos is $500.Its inverse demand curve is Pj= 3500−0.5Qj in Japan and Pa =4500−Qa Solve for the equilibrium prices and quantities (assuming that U.S. customers cannot buy robots from Japan). The equilibrium quantity in Japan is ____and the price, Pj is $____
In many countries, the government chooses to "internalize" the monopoly by owning monopoly providers of goods and services. (In some cases these firms are "nationalized" and the government actually buys or confiscates firms that operate in monopoly markets). Explain TWO advantages and TWO disadvantages of such an approach
Do this problem using excel solver. Africa controls 80% of the world's lithium refining, a material needed for the production of lithium batteries in electric vehicles. The demand for lithium batteries is P = $20,000 - 2.5 Q, where Q is in tons and P is in $/ton. The long run marginal and average cost of production is constant at $2,000/ton. a) Assuming the monopoly model applies, determine price, quantity, and profit for Africa using excel solver b) Now assume new firms enter the lithium market, resulting in (perfect) competition. Determine the price, quantity, and profits, when the industry is in (long run) equilibrium using excel solver c) Finally, compare social welfare for the two cases, and determine deadweight loss using excel solver.
#4 please
Provide an example of a cost function for which a natural monopoly exists. Why might we want to allow natural monopolies to exist (e.g. how might social welfare benefit from such a monopoly)?
Suppose a monopoly firm’s total cost of production TC = f + c•Q where f > 0 and c > 0. Is this firm a “natural monopoly”? Answer ‘Yes” or “No” based on your explanation of the meaning of a “natural monopoly.”
E3
Sid is the CEO of a local power plant operating in monopoly market structure. Explain why the demand curve (P) here is larger than the MR, and why Sid won’t produce on the inelastic portion of demand curve. Draw a graph comparing Sid’s market structure with a market in perfect competition (on the same graph). Be sure to label the components of deadweight loss. On a separate graph, show the case where the monopoly is making a positive profit and label the profit area.
Assume the following equations describe the conditions for a monopoly: Qd = 2,000 - 100P TC = 3,500 + 5q + .005q2 Where Qd is the quantity demanded, P is the commodity's price in dollars, TC is the firm's total cost in dollars and q is the quantity of output produced. Based upon these equations, answer the following questions: a. What is the firm's equation for total revenue expressed as a function of quantity? b. What is the firm's equation for marginal revenue expressed as a function of quantity? What is the firm's equation for marginal cost expressed as a function of quantity? c. What is the firm's profit maximizing quantity of output? d. What price will the firm charge for the commodity? e. What would be the socially optimal quantity of output? f. What price would regulators have to establish in order to have the firm produce the socially optimal quantity of output?
Suppose the market for asparagus has the following (inverse) market demand schedule: p=88-0.2Q The industry has the following cost structure: MC = ATC = $4 The Amalgamated Asparagus Company is looking to spend factor resources in socially-wasteful legal battles and advertising campaigns to maintain a full monopoly in this market. Answer the following. a. For its monopoly, Amalgamated Asparagus is willing to pay resources worth up to $14070 Suppose that competitive rent-seeking pressures cause Amalgamated Asparagus to pay its maximum willingness-to-pay for monopoly rights. b. Social cost of this monopoly = $ 4410 Hint: Your answer to (a) should be whole number. Think about why.
Consider the case of a monopolist who charges the same price to all consumers. The demand for the good is given by Q=813-7p, where Q denotes the quantity demanded at price p. The firm's total cost of producing Q units is given by the function C(Q) = 7 Q What is the efficiency loss in the monopoly equilibrium? (As usual, you must enter a number below, not a ratio, not an expression with symbols..., just a number.)
Suppose a local cable company provides cable service to a rural community. The figure to the right illustrates the cable company's marginal cost of providing cable service along with the community's demand for cable TV. Assume the local cable company is a monopoly. When the company maximizes profits, consumer surplus equals $ (enter a numeric response using a real number rounded to one decimal place), and producer surplus equals $ Compared to the perfectly competitive market outcome, the cable company creates dead weight loss equal to $ Price and cost (dollars per cable subscription) 120- 110- 100- 90- 80- 70- 60- 50- 40- 30- 20- 10- to 10 20 MR D 30 40 50 60 70 80 Quantity of cable subscriptions MC 90 100 ON

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