A monopolist faces a market inverse demand function: P = 250 – 5Q and marginal cost function: ATC = MC = 10. Answer the following. If the monopolist employs a single price strategy, what is the optimal quantity produced and price charged. What is the market up and contribution margin from the strategy in part a if Ed = -1.0833. If other firms trying to enter this market had slightly higher cost structures, what would be a good price & quantity mix to limit entry of competition and why (no math needed). If the monopolist could create a bundled good instead of the strategy in part a, what price would it charge and how many units would be sold in the bundle.
A monopolist faces a market inverse demand function: P = 250 – 5Q and marginal cost function: ATC = MC = 10. Answer the following. If the monopolist employs a single price strategy, what is the optimal quantity produced and price charged. What is the market up and contribution margin from the strategy in part a if Ed = -1.0833. If other firms trying to enter this market had slightly higher cost structures, what would be a good price & quantity mix to limit entry of competition and why (no math needed). If the monopolist could create a bundled good instead of the strategy in part a, what price would it charge and how many units would be sold in the bundle.
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.9P
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4) A monopolist faces a market inverse demand function: P = 250 – 5Q and marginal cost function: ATC = MC = 10. Answer the following.
- If the monopolist employs a single price strategy, what is the optimal quantity produced and price charged.
- What is the market up and contribution margin from the strategy in part a if Ed = -1.0833.
- If other firms trying to enter this market had slightly higher cost structures, what would be a good price & quantity mix to limit entry of competition and why (no math needed).
- If the monopolist could create a bundled good instead of the strategy in part a, what price would it charge and how many units would be sold in the bundle.
- What are the profits from part a & part d? Which pricing strategy is preferred.
- EC: Briefly explain why a firm that offers a buy 2 get the 3rd free deal, does not just offer that same product at a 33.33% discount of the normal stated price.
I need help with number 4
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