A perfect price discriminating monopolist is able to Question 14 options: a) produce where the price of the last unit sold is equal to marginal cost b) maximize profit and capture all consumer surplus c) produce a socially optimal level of output commensurate to that of perfect competition d) all of the above

A perfect price discriminating monopolist is able to Question 14 options: a) produce where the price of the last unit sold is equal to marginal cost b) maximize profit and capture all consumer surplus c) produce a socially optimal level of output commensurate to that of perfect competition d) all of the above

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter9: Monopoly

Section: Chapter Questions

Problem 4SQ

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A monopolist with cost function C(q) = ;q? faces 2 consumers with the following demands: p(q1) = 10 - q1 and p(q2) = 20 – 2q2. Determine prices, quantities to be produced and sold and the monopolist's profits in the following cases: (a) The good can be resold at zero cost among consumers and it is technologically impossible to sell it in bundles of more than 1 unit. b) There is resale at zero cost and bundling in packages of arbitrary size. c) Resale is possible at a cost of "t" per unit. d) The good is a personal and non-transferable service. e) Repeat the above analysis, but this time assuming that costs are C(q) = q with q < 8.
A monopolist faces a market demand curve given by: Q = 80 - pa) Assume that the monopolist has a cost structure where total costs are described by: C(Q) = 0.25Q2 - 5Q + 1000.What price-quantity combination will a profit maximising monopolist choose? What will profits be? b) What output level would be socially optimal? What is the price at this output level, if all units are sold at the same price? What is the profit? What would the social welfare gain be from this output level compared to the outcome in (a)?c) If government regulation forces the firm to set its price equal to its average cost of production, what will the output level be? What is the price at this output level, if all units are sold at the same price? What is the profit? What would the social welfare gain or loss be from this output level compared to the outcomes in (a) and (b)?
Consider a monopolist facing a linear inverse demand curve p(q) = a- bq, where q denotes units of output and b > 0 represents the slope of the inverse demand curve. This rm faces cost function C (q) = F + cq, where F denotes its fixed costs (can contain sunk costs), c represents the monopolist’s (constant) marginal cost of production and assume a > c ≥ 0. Find the socially optimal output level q* which is the value that maximizes consumer surplus (price equals marginal cost). Is it larger or smaller than the profit maximizing output, qm, that you found in part (a)? Is it true that q* = 2qm? Illustrate qm and q* in a graph where price is the vertical axis and q is the horizontal axis. Be sure to include the MR and MC curves as well as the inverse demand curve.
Market Demand is given in the table below. The only producer in the market is a monopolist. They have a constant Marginal Cost of $25. Assume no externalities and only integer units. What is the change in TOTAL Surplus if the monopolist goes from charging the same price for every unit (i.e. single-price) to doing perfect price discrimination. Enter a number only, no $ sign. Include a negative sign if Total Surplus under the single-price setting is higher. Q MWTP 1 $64 2 $48 3 $32 4 $21 5 13
Market Demand is given in the table below. The only producer in the market is a monopolist. They have a constant Marginal Cost of $25. Assume no externalities and only integer units. What is the change in TOTAL Surplus if the monopolist goes from charging the same price for every unit (i.e. single-price) to doing perfect price discrimination. Enter a number only, no $ sign. Include a negative sign if Total Surplus under the single-price setting is higher. MWTP $64 $48 $32 4 $21 13
A monopolist produces a unique product in three different plants, each with its own marginal cost structure. The overall market demand for the product is governed by the demand function = 128 - 8* P,where is the total quantity demanded, and Pis the market price. To meet this demand, the monopolist must decide on the allocation of production quantities Q1, Q2 and Q3 across Plant 1, Plant 2, and Plant 3 respectively. The marginal costs (MC) for producing the good in each plant are as follows: MC₁ = 1, MC₂ = 1 + 2 and MC3Q3. How many units should the monopolist optimally produce in Plant 1 to contribute to the total market demand 62 units O unit 63 units
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Suppose the inverse demand function is linear: p(q) = a - Bq. The monopolist's cost function is c(q) = 6q2 . Assume the monopolist must charge a uniform price. (a) Find the optimum monopoly price and quantity. Also calculate the deadweight loss. (b) Suppose the government can levy a lump-sum tax T (i.e., a fixed amount independent of production) and an excise tax t per unit of production on the monopolist. These taxes can be negative, in which case they are subsidies. The proceeds of these taxes can be transferred to consumers. The monopolist is always free to quit the market, in which case she does not have to pay any taxes. The government wants to maximize the consumer welfare. Find the optimum values of t and T.
A monopolist produces a unique product in three different plants, each with its own marginal cost structure. The overall market demand for the product is governed by = the demand function Q 128 8* P,where is the total quantity demanded, and Pis the market price. To meet this demand, the monopolist must decide on the allocation of production quantities Q1, Q2 and Q3 across Plant 1, Plant 2, and Plant 3 respectively. The marginal costs (MC) for producing the good in each plant are as follows: MC₁ = 1, MC₂ = 1/²+Q2 and MC3 = Q3. How many units should the monopolist optimally produce in Plant 1 to contribute to the total market demand 62 units 63 units O unit -
A monopolist faces a market demand curve given by: Q = 80 - pAssume that the monopolist has a cost structure where total costs are described by: C(Q) = 0.25Q2 - 5Q + 1000.Question a: What output level would be socially optimal? What is the price at this output level, if all units are sold at the same price? What is the profit? Question b: If government regulation forces the firm to set its price equal to its average cost of production, what will the output level be? What is the price at this output level, if all units are sold at the same price? What is the profit? What would the social welfare gain or loss be from this output level compared to the outcomes in (a)?
A monopolist is producing 2 goods. A demand for the first good: A demand for the second good: The total cost expression: P1 = 21 – 2(Q1 – Q2) P2 = 30 – 3(Q2 – Q1) TC = Q1 (1+ Q2) (I) Maximize the profit of the monopolist. Find optimal outputs, prices and profit. (Using the second order conditions prove that you have found the maximum profit.) (II) Now monopolist is restricted to produce a total of 10 units of either goods. (B) Maximize the profit of the monopolist using the method of Lagrange multipliers. What is the interpretation in this case of the value of the Lagrange multiplier?