8. Amonopolist has a cost function C(4) = . The monopolist faces a market demand curve given by q = 10 - p. a. Find marginal cost. b. Calculate the profit-maximizing price-quantity combination for the monopolist. Also calculate the monopolist's profits. c. What output level would be produced by this industry under perfect competition?

8. Amonopolist has a cost function C(4) = . The monopolist faces a market demand curve given by q = 10 - p. a. Find marginal cost. b. Calculate the profit-maximizing price-quantity combination for the monopolist. Also calculate the monopolist's profits. c. What output level would be produced by this industry under perfect competition?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Consider a monopolist where the market demand curve for the produce is given by P = 520 2Q. This monopolist has marginal costs that can be expressed as MC = 100 + 2Q and total costs that can be expressed as TC = 100Q + Q2 + 50.a. Given the above information, what is this monopolists profit maximizing price and output if it charges a single price?b. Given the above information, calculate this single price monopolists profit.c. At the profit maximizing quantity, what is this monopolists average total cost of production (ATC)?
1. A monopolist serves two individuals, A and B. Individual demands are defined by p = 7-9 and PB = 42q, respectively. The monopolist's total cost of production is defined by TC(q + 9) = 2(a +98). Suppose that price discrimination is not possible. a. C ) Sketch market demand and the monopolist's marginal revenue of output. b. ( Find (p, q) and indicate the solution on the graph. State whether anyone is excluded.
Give explanation of the correct option and explanation of the incorrect options. Note: Dear expert hand written is not allowed.
A simple profit-maximizing monopolist with a continuous linear demand curve has positive marginal costs at all levels of production above X = 0. Which one of the following statements is FALSE in the short run? Select one: a. At the chosen level of output, an increase in the price of the good will necessarily reduce total revenue b.At the chosen level of output, demand for the good is price elastic c. At the chosen level of output, the monopolist is not maximizing total revenue d.At the chosen level of output, economic profit is necessarily positive
7
Q)Economics A market comprises two consumers groups: high-demand types and low-demand types. The high types have demand QH = 10 – P and low types have demand QL = 8 – P. If a monopolist has marginal cost MC = 1 + Q, what is the profit maximising price the monopolist would charge if they are not able to price discriminate? a. 5 b. 6 c. 4 d. 7
Please no written by hand solutions 1. Assume the cost function for a monopolist is given by TC(q) = 30Q; the inverse demand function for the firms' output is p = 120 - Q, where Q is the total output. a. Find the profit-maximizing combination of price and quantity b. Estimate consumer surplus, producer surplus and the deadweight loss associated with this monopolist C. If this industry became perfectly competitive, explain and estimate the consumer surplus, producer surplus and deadweight loss of the industry d. Graph your answers for a, b, and c 2. Now assume that the monopolist above splits into two. Each of two firms has the cost function TC(q) = 30q. a. What are the firms' outputs in a Nash equilibrium of Cournot's model? b. Estimate the economic profits for each firm c. If firm 1 is the leader and firm 2 the follower, find the equilibrium outputs for the Stackelberg solution.
Given the following demand schedule for a monopolist in the diamond industry, assume the marginal cost of producing diamonds is constant and equal to 200 and that there are no fixed costs. Quantity 1 2 3 4 5 Price $500 400 300 200 100 Suppose that rival producers enter the market and the market becomes perfectly competitive. How large is the deadweight loss associated with monopoly in this case? Explain the excess capacity problem. (Note: I am not asking for a definition. I want an explanation of the problem.) Explain what is meant when we say that monopolistic competition is a "second-best" outcome. (Note: I am not asking for a definition. I want an explanation of the problem.)
Part D
4. A monopolist produces exactly the same product at three plants with respective costs C = Q1 + Qỉ C2 = 3Q2 C3 = 3Q3 – Q3 Ci If the price for the product is P; = 40 – Qi Rị = P;Qi i = 1,2,3 → TR = E{ R{ Find the critical value (Qj, Q2, Q3) of the firm's profit ( = TR – TC) and use the Hessian to determine if it is a relative minimum or maximum.
2) The Epson Company is a monopolist in the market and faces the demand curve shown in the figure below. The firm's marginal cost curve is MC= 100 +2Q. a. What is the firm's profit-maximizing output and price? Price ($/unit) 400 0 D 200 Quantity of printers (thousand) b. If the firm's demand changes to P = 300 - Q while its marginal cost curve remains the same, what is the firm's profit-maximizing level of output and price? How does this compare to your answer for (a)? c. Draw a diagram showing these two outcomes. Holding marginal cost equal, how does the shape of the demand curve affect the firm's ability to charge a high price? (bonus question 5 points)
3. Suppose a software monopolist faces two markets for its software, students and professionals. The demand curve of professionals is given by Qp = 200-2Pp and the demand curve by students is given by Qs = 150 - 3Ps. The firm's cost function is C(Q) = 400+5Q. (a) If the firm can price discriminate, what price should it charge in each market to maximize profits? How much profit does it earn? (b) If the firm cannot price discriminate, what price should it charge? Verify that it sells to both markets at this price. How much profit does it earn? Hint: If the firm cannot price discriminate, this means it must treat the two markets as a single combined market.