Assume Red Eye, a monopolist, faces a market demand curve P= 130-20, and has the short-run total cost function TC = 350 + 100. What is Red Eye's profit-maximizing level of output and price? What are profits? Graph the marginal revenue, marginal cost, and demand curves. What would price and output be if Red Eye priced at socially efficient (competitive) levels? What is the magnitude of the deadweight loss caused by monopoly pricing? FACE

Assume Red Eye, a monopolist, faces a market demand curve P= 130-20, and has the short-run total cost function TC = 350 + 100. What is Red Eye's profit-maximizing level of output and price? What are profits? Graph the marginal revenue, marginal cost, and demand curves. What would price and output be if Red Eye priced at socially efficient (competitive) levels? What is the magnitude of the deadweight loss caused by monopoly pricing? FACE

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 2: Suppose a monopoly firm produces bicycles and can sell 10 bicycles per month at a price of $700 per bicycle. In order to increase sales by one bicycle per month, the monopolist must lower the price of its bicycles by $100 to $600 per bicycle. What is the marginal revenue of the eleventh bicycle?
Place the black point (plus symbol) on the following 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 the loss. 4.00 3.50 Monopoly Outcome 3.00 2.50 Profit 2.00 АТC 1.50 Loss 1.00 0.50 MC MR 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 QUANTITY (Thousands of cans of beer) PRICE (Dollars per unit)
QUESTION 7 A monopolist produces a good with a constant marginal cost of c = 10 and fixed cost of F = 1000. Demand for the product is given by D(p) = 90 - p. The firm could be subjected to price regulation that enforces marginal cost prices and subsidises any losses of the company. Suppose the regulator's objective is to maximise the difference between total welfare and the cost of subsidies allocated to the company. Assume the social cost of subsidies St are BS where ß > 0. Which of the following statements is correct? O The unregulated monopoly price is 40 and price regulation is optimal for any B 4/5. O The unregulated monopoly price is 50 and price regulation is optimal for any ≤ 2/5. O The unregulated monopoly price is 50 and price regulation is optimal for any B < 4/5. O The unregulated monopoly price is 40 and price regulation is optimal for any B≤ 2/5. O None of the above.
The graph depicts market conditions for an unregulated, profit-maximizing monopolist that is unable to price discriminate. Assuming the market demand function is equivalent to marginal benefit, the socially efficient level of output in this market is 1000 units of output; deadweight loss is approximiately equal to $________ (since the MC function is not a straight line and deadweight loss is measured as the area of a triangle, it is an appoximation).
d. Suppose the government imposes an average pricing rule, requiring the monopolist to set its price equal to the average total cost. Place the point labeled “Average cost pricing” at the appropriate coordinates to indicate the firm's price and quantity under this rule. Please place the Monoploy Pricing, Marginal Cost Pricing, and Average Cost Pricing on their appropriate places on the graph. Thank you!
Continue with your analysis of the monopoly cable-television company with demand of Qd = 60 - P/2 (alternatively, you can write the demand equation as Qd = 60 – 0.5P) and MC = 0.5Q + 30. Explain how you’ve determined the socially optimal output level. How does the socially optimal output compare to the monopolist output in terms of individual CS, PS, and DWL (e.g., compare CSm and CSSOC, and so on)? How does the total surplus (sum of consumer and producer surpluses) compare between the two situations? (Narrative response; suggested length of four to eight sentences or one to two paragraphs. It might be useful to create a table to contrast the two settings.)
please help and if it's on paper please please write in a way that is understandable!
We are given an inverse market demand curve: P = 300 – 0.00006Q and the total cost of production. Assume that the total cost of production is the same for the entire market and the monopolist TC = 11,000,000 + 0.0006Q Explain how the market outcomes of perfect competition and monopoly differ for the given market. Use both mathematical and graphical method. Point out consumer and producer surplus, and total welfare ( No need of diagram )
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Suppose a local utility company provides electricity to a small town. The figure to the right illustrates the utility company's marginal cost of providing electricity along with the town's demand for electricity. Part 2 Assume the local utility company is a monopoly. Use the triangle drawing tool to shade in the dead weight loss created by the monopoly (compared to if the market were perfectly competitive). Properly label this shaded area. Part 3 Carefully follow the instructions above, and only draw the required objects. ... Question content area right Part 1 010203040506070809010000.020.040.060.080.10.120.140.160.180.20.220.24Quantity of electricity (kilowatt hours in millions)Price and cost (dollars per kilowatt hour) MCMC Upper DD MR
Suppose a cable company provides cable service to a small town. The total revenue, marginal revenue, total cost, and marginal cost of providing various quantities of cable subscriptions (units in thousands per month) are presented in the table below. Quantity 0 1 2 3 4 5 6 Price 202 200 198 196 194 192 190 Total Revenue $0 200 396 588 776 960 1140 Assume the local cable company is a monopoly. To maximize profits, the monopoly should produce At that level of output, the cable company will earn economic profits of $ (thousand per month). Marginal Revenue 200 196 192 188 184 180 Total Cost 0 180 270 330 420 660 960 Marginal Cost 180 90 60 90 240 300 (thousand) units. (Enter a numeric response using an integer.)