None A retail market has an inverse demand function PR = 100-Q. The market is monopolized bya retailer who buys the product from a monopolist wholesaler at price Pw; the wholesalerbuys the product from a monopolist manufacturer at price Pm. The manufacturer's marginalcost is 10.4.1. Illustrate graphically this situation with three monopolists vertically linked.4.2. Find the profit maximizing quantities and prices.4.3. Prove graphically that the merger between two monopolists increases profits andconsumer's surplus.

4.3 Proving that Merger Increases Profits and Consumer SurplusA merger between two monopolists…

Answered: A retail market has an inverse demand…

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter13: Antitrust And Regulation

Section: Chapter Questions

Problem 10SQP

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Profit maximization and loss minimization BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Suppose that BYOB cannot price discriminate; that is, it sells its beer at the same price per can to all customers. The following graph shows the marginal cost (MCMC), marginal revenue (MRMR), average total cost (ATCATC), and demand (DD) for beer in this market. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for BYOB. If BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if BYOB is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. (Graph 1) Suppose that BYOB charges $2.00 per can. Your friend Felix says that since BYOB is a monopoly with market power, it should charge a higher price of $2.25 per can because this will increase BYOB's profit.…
Profit maximization and loss minimization BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Suppose that BYOB cannot price discriminate; that is, it sells its beer at the same price per can to all customers. The following graph shows the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) for beer in this market. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for BYOB. If BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if BYOB is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. Suppose that BYOB charges $2.75 per can. Your friend Rajiv says that since BYOB is a monopoly with market power, it should charge a higher price of $3.00 per can because this will increase BYOB’s profit. Complete the…
Suppose that a monopolistic seller of designer handbags faces the following inverse demand curve: P= 50 – 0.4q. The seller can produce handbags for a constant marginal and average total cost of $10. Calculate the profit-maximizing price for this seller. Now, suppose the government levies a $4 tax per unit on sellers of handbags. Calculate how this tax will affect the price the monopolist charges its customers and who will bear the burden of this tax.
BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Suppose that BYOB cannot price-discriminate; that is, it sells its beer at the same price per can to all customers. The following graph shows the marginal cost ( MCMC ), marginal revenue ( MRMR ), average total cost ( ATC ), and demand ( DD ) for beer in this market.
The customers Jack the Block Monopolist serves are of two types, low- demandcustomers with an inverse demand P 12 - 2Q, and high-demand customers with an inverse demand Ph = 16 - 20h. Thereis one high-demand customer and two low - demand customers. Jack's marginal cost of production is $4 per additional unit. Jack is using a block pricing strategy.Assume that Jack knows which type of customer is which. How much would Jack to sell to low - demand customers, and at what package price? How much would Jack sell to low - demand I = customers and at what package price? Calculate jack's profit and total surplus
Consider any market that has a demand curve given by: Qd = 125 - 0.4P. Being the total quantity demanded in the market, given the quantity in millions of units and the market price, calculated in monetary units. Imagine that there are 2 Cournot oligopolists operating in this market that have Cmg = CVme = 2. About this market, the question is: a) What is the reaction curvature of the oligopolists? b) What will be the production of each of the companies? c) What is the sale price for oligopolists?
Exercise A.3 Two duopolists with constant and equal marginal costs supply the same market demand. Graphically represent the irrecoverable loss of efficiency when: a) The duopolists agree to form a cartel (collusion). b) The duopolists compete against the Bertrand.
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Quick Buck and Pushy Sales produce and sell identical products and face zero marginal and average cost. The accompanying graph shows the market demand curve for their product. Price ($/unit) 1000 2000 3000 4,000 Quantity (units/month) If Quick Buck and Pushy Sales decide to collude and work together as a monopolist, then together they should produce Multiple Choice 3,000; $1 4,000; $2 D 2,000; $2 1,000; $3 units per month and charge per unit.
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