A monopolist faces an inverse demand of P(Q) = 210 – 4Q and constant marginal costs%3D1. Calculate the optimal price, quantity and total revenues, for MC = 10 and MC = 20.2. Repeat question (1) under perfect competition.3. Interpret the above results intuitively4. Take the monopoly equilibrium at MC=10. Now the government imposes a maximum price of $ 30.Discuss the effects of this measure.5. Instead of the maximum price, the government gives the monopoly a subsidy of $ 10, so the marginalcost of the monopoly effectively drops to zero. Discuss the welfare effects and compare with PerfectCompetition.

P= 210-4Q TR= P×Q = (210-4Q)Q MR = dTR/dQ = 210-8Q

A monopolist faces an inverse demand of P(Q) = 210 – 4Q and constant marginal costs 1. Calculate the optimal price, quantity and total revenues, for MC = 10 and MC = 20. 2. Repeat question (1) under perfect competition. 3. Interpret the above results intuitively

A monopolist faces an inverse demand of P(Q) = 210 – 4Q and constant marginal costs 1. Calculate the optimal price, quantity and total revenues, for MC = 10 and MC = 20. 2. Repeat question (1) under perfect competition. 3. Interpret the above results intuitively

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: 3. A monopolist can produce at a constant marginal cost of c=5 (that is cost of producing q units is…

A: Under a monopoly, a single seller faces the entire market demand on his own. Here, the seller…

Q: Q1. A monopolist will not produce at all if the intersection of marginal revenue and marginal cost…

A: Note:- Since we can only answer one question at a time, we'll answer the first one. Please repost…

Q: The demand price for a monopolistic firm's product is a function of quantity q and quality s: P…

A: The demand for the monopolistic firm is given as where, q is the quantity and s is the quality,The…

Q: At the profit-maximizing level of output for a monopolist: a)Price is greater than marginal cost…

A: In a monopoly market structure, There exists a single seller. There exists high barriers to entry…

Q: A monopolist is currently charging a price of $6 and the marginal cost at the profit maximizing…

A: The profit maximization condition in a monopoly market is when marginal revenue is equal to marginal…

Q: Price discrimination, a strategy used by monopolists, involves charging different prices for the…

A: The practice of charging different prices for the same good or service to different consumers or…

Q: Suppose a representative monopolistic firm faces the following demand function: Pi = 20-2qi where pi…

Q: The demand curse facing a firm in long run monopolistic competition is P= 350- Q. the firm's total…

A: In the long-run, the outside sellers can conveniently enter the market or existing seller can exit.…

Q: Which of the following alternatives achieves the highest profits for the monopolist? (a) Offering…

A: Identify the Objective: The objective of the firm is to maximize profits, which can be represented…

Q: A firm is originally operating as a single-price monopolist that faces a market demand curve…

A: Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Babydrink is a monopolist due to its patent in infant formula. The total cost for production in…

A: Monopoly refers to market where the only single firm exists in the market. single firm is price…

Q: 2. Given that the industry demand curve is X(p) = 3000 – 15p and a firm's marginal cost is 50 (MC =…

A: Under perfect competition, there are many buyers and sellers. All the sellers sell homogeneous…

Q: None

A: Step 1The monopolistic demand curve isQ = 22,194 - 274PSolving it for price, we have274P = 22,194 -…

Q: 3. A monopolist can produce at a constant marginal cost of c5 (that is cost of producing q units is…

A: Under a monopoly, a single seller faces the entire market demand on his own. Here, the seller…

Q: The demand and total cost functions for a monopolistically competitive market are: Q(P) =…

A: Monopolistic competition occurs when multiple enterprises provide similar (but not identical) goods…

Q: Initially, a profit maximizing local monopolist charges $15 and sells 500 units per week. Per unit…

A: Given information - Scenario 1 - Equilibrium price in monopolist market - $15 Equilibrium Quantity…

Q: 53) A monopolist faces a straight-line demand curve and is currently producing an output level of…

A: The objective of the question is to calculate the marginal revenue for a monopolist firm at an…

Q: A perfectly competitive firm is expected to make a $0 economic profit in the long-run. What type(s)…

A: Perfectly competitive firm is a price taker and monopolist is a price maker.

Q: Exercise 3.8. Dayna's Doorstops, Inc. (DD) is a monopolist in the doorstop industry. Its cost is C =…

A: Inverse Demand Function; P = 55 - 2Q Cost Function = C = 100 –5Q+Q2

Q: If a country is importing more than it is exporting it will have a balance of trade trade surplus…

A: Balance of trade is the difference between the total value of exports and imports.

Q: A monopolist is facing the market demand, P = = 10 - Q. Which of the following statements is…

A: Monopoly market structure is one under which there is a single seller kn the market and hence the…

Question

A monopolist faces an inverse demand of P(Q) = 210 – 4Q and constant marginal costs
%3D
1. Calculate the optimal price, quantity and total revenues, for MC = 10 and MC = 20.
2. Repeat question (1) under perfect competition.
3. Interpret the above results intuitively
4. Take the monopoly equilibrium at MC=10. Now the government imposes a maximum price of $ 30.
Discuss the effects of this measure.
5. Instead of the maximum price, the government gives the monopoly a subsidy of $ 10, so the marginal
cost of the monopoly effectively drops to zero. Discuss the welfare effects and compare with Perfect
Competition.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

Step 2

Step 3

Step 4

Step 5

Step by step

Solved in 5 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Suppose that a unique technology is developed that allowed for the production of lightsabers. The inspired entrepreneur (let's say, Lucas George) who developed the technology immediately slaps a patent on the design and hoards kyber crystals (necessary input). Demand and production costs are given below: P(Q) = 14,000 - 600Q C(Q) = 3,000 + 100² 1. How much profit does Lucas the monopolist earn? 2. Solve for the market failure of Lucas operating as a monopolist relative to what would be observed if Lucas operated as a competitive firm. Martin the Martian (not to be confused with any other martian that might be copyrighted...) observes the profits being made by Lucas. Determining that ray guns are not that different from lightsabers, Martin begins competing with Lucas: P'(Q) = 12,000 - 600Q' 3. A third potential business owner, Dr. When, has watched this market carefully and is trying to decide whether or not to market her Sonic Screwdriver (a near-substitute). Based on your previous…
Subpart 7
Consider the long-run equilibrium in a monopolistically competitive market. Which of the following alternatives is correct? (a) Price is equal to marginal cost (b) The equilibrium is cost-efficient: Firms produce at the minimum of the average cost curve (c) The equilibrium is welfare-efficient: There is no deadweight loss (d) There are no barriers to entry: Every firm earns zero profits
No written by hand solution
Assume a market demand curve Y(p)=3000-15p and a firm’s marginal cost is 60 (MC=60), For a monopolist, solve for the optimal quantity supplied and prevailing market price.
Problem 19 A publishing company has a monopoly in the sales of football cards. According to its estimates, the company's inverse demand function is p = 0.4-0.01q. The company's marginal cost is constant at £0.08. Suppose that the company wants to sell football cards in albums only. Using such a block pricing approach, what will be optimal price that the firm needs to set to maximize its profits? a) £5.12 b) £7.68 c) £2.56 d) £15.36 e) £3.84
help please answer in text form with proper workings and explanation for each and every part and steps with concept and introduction no AI no copy paste remember answer must be in proper format with all working
Based on the best available econometric estimates, the market elasticity of demand for your firm’s product is −3. The marginal cost of producing the product is constant at $100, while average total cost at current production levels is $175.Determine your optimal per unit price if:Instructions: Enter your responses rounded to two decimal places.a. you are a monopolist.
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.
In a monopolistically competitive industry, a firm has a short-run and long-run cost function C = 150 + 20Q + 5Q2 The demand function for the firm's product is Q = α – P. (C = cost, Q = quantity, P = price, α = parameter). (i) If α = 116 short, determine the quantity, the price and profit of the business. (ii) What is the firm's demand function at long term equilibrium? MAKE A GRAPH
Under monopoly, a firm: Question 18 options: A) is a price taker. B) maximizes profit by setting marginal cost equal to marginal revenue. C) will shut down in the short-run if price falls short of average total cost. D) always earns a pure economic profit. Both a perfectly competitive firm and a monopolist: Question 19 options: A) always earn an economic profit. B) maximize profit by setting marginal cost equal to marginal revenue. C) maximize profit by setting marginal cost equal to average total cost. D) are price takers. Which of the following is a market structure of monopoly? Question 15 options: A) Few firms operating as price takers. B) Single firm operating as a price taker. C) Single firm that is a price maker. D) All of the above are true.
True of False: A monopolist selling cars in New York finds it unprofitable to raise price by 10% above the current level. Thus, the relevant market is cars in New York.