Babe's Bats (BB) sells baseball bats for children around theworld. The firm faces a demand curve of Q10-0.4P, whereQ is measured in thousands of bats and P is dollars per bat. BBhas a marginal cost curve equal to MC = 5Q.1. Calculate profit maximizing quantity and price under perfect competition2. Calculate profit maximizing quantity and price of monopolist3. Calculate Lerner index4. Welfare impacts: perfect competition and monopolya. CS, PS under perfect competition and monopolyb. DWL under monopoly5. Show this problem and your answers graphically (Note MC is upward sloping not.horizontal)

1. Profit-maximizing quantity and price under perfect competition In perfect competition, the firm…

Answered: Babe's Bats (BB) sells baseball bats…

Microeconomics A Contemporary Intro

10th Edition

ISBN:9781285635101

Author:MCEACHERN

Publisher:MCEACHERN

Chapter9: Monopoly

Section: Chapter Questions

Problem 8QFR

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A perfectly competitive firm is expected to make a $0 economic profit in the long-run. What type(s) of profit would you expect a monopolist to earn in the long-run? Why the difference? Use the editor to format your answer
Draw the cost curves for a typical firm. Explain how a competitive firm chooses the level of output that maximizes profit. At that level of output, show on your graph the firm’s total revenue and total cost. Draw the demand curve, marginal revenue curve, average total cost curve, and marginal-cost curve for a monopolist. Show the profit-maximizing level of output, the profit-maximizing price, and the amount of profit. Why the demand curve for a firm operating in monopolistic competition is more elastic compared to the firm operating as a monopoly. kindly solve all the parts.
Why is there a price markup over marginal cost in monopolistic competition? a downward-sloping demand curve, price exceeds marginal cost The graph shows the demand curve and marginal revenue curve of Whitewater, Inc., a producer of rubber rafts in monopolistic competition. Draw the marginal cost curve if the firm produces 150 rafts a week. Label it. Draw a point at the intersection of the MC and MR curves. Draw a point to show the price that Whitewater charges for a raft when it produces 150 rafts a week. Draw an arrow to show the amount of Whitewater's markup. What is Whitewater's markup? Whitewater's markup is $750 a raft. 750- 675- 600- 525- 450- 375- 300- 225- 150- 75- 0 Price and cost (dollars per raft) 50 100 150 Quantity (rafts per week) D MR 200 >>> Draw only the objects specified in the question. 21
Compare the long-run equilibrium position of a perfectly competitive firm and a monopolist.Illustrate your answer with the aid of diagrams.
QUESTION 1 A. The total cost function for a monopolist is given by TC = 44,000 + 180Q + 0.03Q² and the demand function is P = 420 – 0.06Q per unit of output. i. What is the profit maximising level of output? ii. Calculate the profit maximizing price. iii. Calculate total profit at the profit maximising level of output.
PRICE 1 2 10. Study Questions and Problems #10 The following graph represents a natural monopolist. Suppose that regulators have set the fair-return price at $3. Use the black point (cross symbol) to indicate the equilibrium under unregulated monopoly. Then use the grey point (star symbol) to indicate the equilibrium for the monopoly regulated by marginal cost pricing. Finally, use the purple point (diamond symbol) to indicate the equilibrium for the monopoly regulated by fair-return pricing. 5 • + MC Pricing Monopoly Pricing LRAC Fair-Return Pricing LRMC MR D 0 0 1 2 3 4 5 6 7 8 QUANTITY Use the graph to complete the following table. Pricing Price (Dollars) Quantity (Units) Stays in Business? Unregulated monopoly $ Marginal cost pricing $ Under which of the following pricing regulations will the monopolist stay in business? Check all that apply. Fair-return pricing Marginal cost pricing Monopoly pricing
A single-price monopolist faces an inverse market demand curve given as P (Q) = 100 − Q. The firm's total cost curve is C (Q) = 100 + 40Q + 1Q2. a. What are the equilibrium price and quantity in this market? (Find the profit maximizing quantity and price) (Round your answer to two decimal places and use it in the following parts) b. What are the firm's economic profits and economic rents? (Round your answer to two decimal places) c. What is the deadweight loss of this monopoly? (Round your answer to two decimal places)
Assume there is no price discrimination: Matthew, Rachel, Janice, and Mandy own the only ice company in town (they have a monopoly on the ice market). Matthew wants to sell as much ice as possible without losing money. Rachel wants the ice company to bring in as much revenue as possible. Janice wants to maximize total surplus and Many wants to make the largest possible profit. Use ONE clearly-labelled graph of the ice company’s marginal revenue, demand, and cost curves to show the price and quantity (i.e., ice) each person desires. Provide explanation.
Spike the Bulldog is the only seller of Zagopoly board games in Spokane. The inverse demand curve for this game is given by P = 40 – 0.5Q, where Q is in hundreds of games per month. Spike's marginal cost of producing board games is 7 + 0.1Q. a. If Spike cannot price-discriminate, what is his profit-maximizing level of output? What is his profit-maximizing price? b. How much consumer surplus will buyers of the board game receive? How much producer surplus will end up in Spike's pockets? How much deadweight loss is created by the board game monopoly? c. Suppose Spike is a magnificent salesman, able to discern perfectly his customers' willingness to pay. If he leverages this information to begin perfectly price discriminating, how many board games will he sell? d. How much surplus will buyers receive from a perfectly price- discriminating Spike? How much producer surplus will Spike capture? What will the deadweight loss due to monopoly be?
An unregulated natural monopoly bottles Mt. McKinley air, unique clean air that has no substitutes. The monopoly's total fixed cost is $30,000 a year and its marginal cost is 10 cents a can. The graph illustrates the demand for Mt. McKinley air. Draw the average total cost curve. Plot the four control points at the quantities 100,000, 200,000, 300,000, and 400,000. Label the curve. Draw a point at the new quantity and price if the regulator sets a price cap such that the monopoly breaks even. The number of cans produced sold its marginal cost. A. is; benefit; exceeds B. is not; benefit; exceeds OC. is not; revenue; is greater than D. is; revenue; equals the efficient quantity because the marginal from the last can 60- 50- 40- 30- 20 20 10- Price (cents per can) 0- ATC MC D $300 100 200 300 400 Quantity (thousands of cans per year) >>> Draw only the objects specified in the question. 500
Fruity Apples is the monopolist in the market for apples. The following equations describe the demand, the marginal cost, and the total cost, where Q is in pounds and P is price per pound. Demand: P = 93 - Q Marginal cost: MC = 3 + 2Q Total cost: TC = 3Q+Q². What would the equilibrium price and quantity be if this market was perfectly competitive? P = $61 and Q = 32 pounds P = $30 and Q = 63 pounds P = $63 and Q = 30 pounds P = $32 and Q = 61 pounds
Question 3 Draw the demand, marginal revenue, average total cost, and marginal cost curves for a pure monopolist. Show the profit - maximizing level of output, the profit - maximizing price, and the amount of profit.

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