A monopoly has 2 groups of potential consumers: group 1, with aggregate demand curve D1:91=20p,3 and group 2, with aggregate demand curve D2 q2=D24-2p2. The monopoly's costfunction is c(Q)=3+6Q. If the monopoly may engage in 3rd-degree price discrimination, what willbe the price difference between the 2 groups?O a. p1-p2=9O b. Pr-P2=0O c. Pp1-p2=6O d. None of the other answers.O e. p1-P2=18Next page

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Price and cost (dollars per unit) 50.00 40.00 S=MC 30.00 20.00- 10.00. MR D. 100 200 300 400 500 Quantity (units per hour) In the above figure, a monopoly should charge $ for its output when maximizing profit. O $10 $20 $30 $40 O $50
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[Q: 11-4660750j Consider a monopoly that faces an inverse demand curve with a constant elasticity, p(Q) = Q°, and that has a constant marginal cost, MC(Q) = m. If the own-price elasticity is e = - 6.9, marginal costs are m=7, and the government imposes a specific tax on the monopolist, what will be the tax incidence on consumers? O A. 65.42% O B. 38.1% OC. the same incidence as when the tax is imposed on a perfectly competitive firm. O D. 50% O E. 116.95%
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The figure to the right illustrates market demand for a monopoly along with its average total cost (ATC) curve. Is the monopoly a natural monopoly? The firm O A. is a natural monopoly because its demand curve is downward sloping. O B. is a natural monopoly because it has the potential to earn economic profits. OC. is not a natural monopoly because its demand curve is not infinitely elastic. O D. is not a natural monopoly because it experiences diseconomies of scale. OE E. is a natural monopoly because it can supply the entire market at lower average total cost than can two or more firms. Suppose 14 units of output are supplied in the market. How much lower is the average total cost of production for one firm compared to two firms? One firm can supply 14 units of output for $less per unit in average total cost than two firms. (Enter your response as an integer.) Price and cost (dollars per unit) 10.00- 9.00- 8.00- 7.00- 6.00- 5.00- 4.00- 3.00- 2.00- 1.00- 0.00- 0 2 4 6 ATC Demand 8 10…
¹Consider a monopoly firm- firm 1 - which is choosing to invest in a new production facility. It has two choices: Facility Cost Capacity Small, S $12 2 units at zero marginal cost Large, L $30 10 units at zero marginal cost Both choices put a capacity constraint on the amount that the firm can produce. The firm is less capacity constrained if it builds a larger facility; however, a larger facility also imposes a greater cost. The demand curve for firm 1 is: P = 12 - Q₁ A. Suppose the monopoly firm does not face any threat of entry. Will the firm invest in a small or a large facility?
QUESTION 10 For a monopoly firm: O A. total revenue is a straight, O B. the marginal revenue curve lies O C. the marginal revenue curve lies O D. the marginal revenue curve lies upsloping line because a firm's sales are independent of product price above the demand curve because any below the demand curve because below the demand curve because reduction in price applies to all units any reduction in price applies to any reduction in price applies only to the extra unit sold sold all units sold
Consumer surplus is largest for: a perfectly competitive industry. any price discriminating monopoly. O a single-price monopoly. O a perfectly price discriminating monopoly.
1. The following table contains valuations for goods X and Y. Suppose that the marginal cost of producing X is 1, and this is equal to the marginal cost of pro- ducing Y. Product X Product Y Consumer type 1 3 Consumer type 2 3 3 Consumer type 3 (a) Find the optimal monopoly price in case of pure bundling. (b) Find the optimal monopoly price in case of mixed bundling. Which among strategies a) and b) gives higher profits to the monopolist? Product X Product Y Product X+Y Consumer 1 4 3 7 Consumer 2 3 3 6. Consumer 3 4 4
Q15: Refer to Figure 6-1 i Describe the area representing the deadweight loss to society due to monopoly. What curves is it between and/or above and/or below? Between what prices and/or quantities, if applicable? It may help to say why this is a loss to society.
1. Given the demand function and total cost function in monopoly market: Q = 120 – 5P TC = 100+3Q+0.005Q2 where Q is the quantity produced, P is the price and TC is the total cost ($). (1) Please find the optimal Q and P for the objective of Maximum Total Profit. (2) Please find the optimal Q and P for the objective of Maximum Net Total Benefit. (3) Please compare the social welfare, consumer surplus and producer surplus for these two objectives. 2. What is Oligopoly? Please give 5 examples of Oligopoly market.
12: Suppose Vought International has a monopoly on "Supe" protective service plans. The inverse demand for protective service plans Q is p(Q) = 240 – 8Q while the cost of protective service plans is C(Q) = 2Q? (1) Find the number of plans Q Vought International chooses, and the corre- sponding price p. (2) How much deadweight loss does the monopoly create?

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