7. Market demand curve is Q(P)=10-P. There is a monopoly firm in the market with cost structure given by C(q)=2+4q if q>0 and C(q)=0 if q=0. where q is firm's output. (note that since monopoly is the only firm in the market, it provides the market quantity hence q=Q) a. Find and draw the monopolist' average cost and marginal cost curves. b. Find the monopolist's price and quantity. c. Find consumer surplus, monopolist's profits and deadweight loss.

7. Market demand curve is Q(P)=10-P. There is a monopoly firm in the market with cost structure given by C(q)=2+4q if q>0 and C(q)=0 if q=0. where q is firm's output. (note that since monopoly is the only firm in the market, it provides the market quantity hence q=Q) a. Find and draw the monopolist' average cost and marginal cost curves. b. Find the monopolist's price and quantity. c. Find consumer surplus, monopolist's profits and deadweight loss.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

7. Market demand curve is Q(P)=10-P. There is a monopoly firm in the market with cost
structure given by C(q)=2+4q if q>0 and C(q)=0 if q=0. where q is firm's output. (note that
since monopoly is the only firm in the market, it provides the market quantity hence q=Q)
a. Find and draw the monopolist' average cost and marginal cost curves.
b. Find the monopolist's price and quantity.
c. Find consumer surplus, monopolist's profits and dead weight loss.

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An Question 7. Assume that a monopolist sells a product with the cost function C = 300 + 20Q, where C is the total cost, and Q is the level of output. The inverse demand function is P = 60 - Q. where P is the price in the market. The firm will earn zero economic profit when it charges a The maximum profit the price of either $10 or $. The firm's profit-maximizing price is $ which is the difference between the total revenue TR-$ and the total firm earns is $ cost TC-$ Answer:
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. If MR(Q) > 0, then total revenue increases by selling more units. If MR(Q) < 0, then total revenueincreases by selling fewer units. Calculate the Q* such that MR(Q*) = 0: this will be where total revenueis maximized.B. Determine the price P* the monopolist must charge in order to sell Q* units by plugging your answer forQ* into the inverse demand curve P(Q). C. Neatly draw a graph showing the demand curve for widgets and the marginal revenue curve, carefullyshowing the vertical and horizontal intercepts. Also show Q* and P*. PLEASE SHOW ALL WORK
Price and cost MO 120 Township is a small, isolated community served by one newspaper that can meet the market demand at a lower cost than two or more newspapers could. The Township Gazette is the only source of news. The graph shows the marginal cost of printing the Township Gazette and the market demand for it. The Township Gazette is a profit-maximizing, single-price monopoly. What is the efficient number of copies of the Township Gazette and what is the price at which the efficient number of copies could be sold? 100- The efficient number of copies of the Township Gazette is and the price at which this number could be sold is cents a copy. GALLE 80- 60- 40- 20- D 04 0 100 200 300 400 500 Quantity (newspapers per day) 600 5
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7
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