Biven in tiie labie. we price and quurany usng uie give there is no fixed costs and the monopolist maximizes profit. e. Show CS, PS, and DWL on your graph in part c. Calculate the exact size of CS, PS, TS, and DWL. (Fill in the blanks in part h.) a. Fill in the blanks. [Hint: MR = MC = You may want to construct columns for AQ. . ATR, and ATC to find MR and MC.] f Now the monopolist decides to conduct the perfect price discrimination. That means, the monopolist charges each consumer exactly his or her willingness to pay. Draw the same graph as in part c, show CS, PS, and DWL on your graph and calculate the exact size of CS, PS, TS, and DWL in this situation. (Fill in the blanks in part h.) P TR MR TC MC Profit 20 30 600 16 240 8 360 18 40 320 50 g. After the patent right run out, many firms enter the market and sell identical products in the market. Now the market is assumed to be perfectly competitive. (Fill in the blanks in part h.) In the long-run, what will be the market price and firms' profit? Briefly explain why. [Hint: Use the fact that ATC is always 8 in this case.] 16 400 14 60 480 12 70 560 b. From the table above, what is the price the monopoly firm would choose? From now on, we will use the function forms of the previous table: h. Find the size of CS, PS, TS, and DWL from part e, part f, and part g. Fill in the blanks. Monopoly (Part e) Monopoly with price discrimination (Part f) Perfect Competition (Part g) Demand: P = 26 -e Marginal Revenue: MR = 26 –Q Marginal Cost: MC = 8 CS PS TS c. Draw demand, MR and MC curves on the same graph. (Note: This question does not carry any points, because the graph is drawn for you as below. You can use it directly to answer the following questions.) DWL P Question: According to the table above, is the market outcome efficient when the monopolist conducts the perfect price discrimination? If so, explain why. 26 MC MR Q
Biven in tiie labie. we price and quurany usng uie give there is no fixed costs and the monopolist maximizes profit. e. Show CS, PS, and DWL on your graph in part c. Calculate the exact size of CS, PS, TS, and DWL. (Fill in the blanks in part h.) a. Fill in the blanks. [Hint: MR = MC = You may want to construct columns for AQ. . ATR, and ATC to find MR and MC.] f Now the monopolist decides to conduct the perfect price discrimination. That means, the monopolist charges each consumer exactly his or her willingness to pay. Draw the same graph as in part c, show CS, PS, and DWL on your graph and calculate the exact size of CS, PS, TS, and DWL in this situation. (Fill in the blanks in part h.) P TR MR TC MC Profit 20 30 600 16 240 8 360 18 40 320 50 g. After the patent right run out, many firms enter the market and sell identical products in the market. Now the market is assumed to be perfectly competitive. (Fill in the blanks in part h.) In the long-run, what will be the market price and firms' profit? Briefly explain why. [Hint: Use the fact that ATC is always 8 in this case.] 16 400 14 60 480 12 70 560 b. From the table above, what is the price the monopoly firm would choose? From now on, we will use the function forms of the previous table: h. Find the size of CS, PS, TS, and DWL from part e, part f, and part g. Fill in the blanks. Monopoly (Part e) Monopoly with price discrimination (Part f) Perfect Competition (Part g) Demand: P = 26 -e Marginal Revenue: MR = 26 –Q Marginal Cost: MC = 8 CS PS TS c. Draw demand, MR and MC curves on the same graph. (Note: This question does not carry any points, because the graph is drawn for you as below. You can use it directly to answer the following questions.) DWL P Question: According to the table above, is the market outcome efficient when the monopolist conducts the perfect price discrimination? If so, explain why. 26 MC MR Q
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
*You only need to answer question g*
![d. Calculate the monopoly firm's optimal price and quantity using the given functions.
A monopoly firm holding a patent right faces a market demand given in the table. We assume
there is no fixed costs and the monopolist maximizes profit.
1.
e. Show CS, PS, and DWL on your graph in part c. Calculate the exact size of CS, PS,
TS, and DWL. (Fill in the blanks in part h.)
ATC
a. Fill in the blanks. [Hint: MR = 4TR
MC =
AQ
AQ
You may want to construct columns for AQ
ATR, and ATC to find MR and MC.]
f. Now the monopolist decides to conduct the perfect price discrimination. That means,
the monopolist charges each consumer exactly his or her willingness to pay. Draw the
same graph as in part c, show CS, PS, and DWL on your graph and calculate the exact
size of CS, PS, TS, and DWL in this situation. (Fill in the blanks in part h.)
P
Q
TR
MR
TC
MC
Profit
20
30
600
16
240
8
360
18
40
320
g. After the patent right run out, many firms enter the market and sell identical products
16
50
400
in the market. Now the market is assumed to be perfectly competitive. (Fill in the blanks
in part h.) In the long-run, what will be the market price and firms' profit? Briefly
explain why. [Hint: Use the fact that ATC is always 8 in this case.]
14
60
480
12
70
560
b. From the table above, what is the price the monopoly firm would choose?
h. Find the size of CS, PS, TS, and DWL from part e, part f, and part g. Fill in the blanks.
From now on, we will use the function forms of the previous table:
поw
Monopoly
(Part e)
Monopoly with
price discrimination
(Part f)
Perfect Competition
(Part g)
Demand: P = 26 -
Marginal Revenue: MR = 26 -Q
CS
Marginal Cost: MC = 8
PS
c. Draw demand, MR and MC curves on the same graph. (Note: This question does not
TS
DWL
carry any points, because the graph is drawn for you as below. You can use it directly
to answer the following questions.)
Question: According to the table above, is the market outcome efficient when the
P
monopolist conducts the perfect price discrimination? If so, explain why.
26
8
MC
MR
Q](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fcfcc628e-0ed9-4421-801f-d415a517e385%2F2e8f491a-3311-43e4-b554-fca36a1e4056%2Fgnwofdbw_processed.png&w=3840&q=75)
Transcribed Image Text:d. Calculate the monopoly firm's optimal price and quantity using the given functions.
A monopoly firm holding a patent right faces a market demand given in the table. We assume
there is no fixed costs and the monopolist maximizes profit.
1.
e. Show CS, PS, and DWL on your graph in part c. Calculate the exact size of CS, PS,
TS, and DWL. (Fill in the blanks in part h.)
ATC
a. Fill in the blanks. [Hint: MR = 4TR
MC =
AQ
AQ
You may want to construct columns for AQ
ATR, and ATC to find MR and MC.]
f. Now the monopolist decides to conduct the perfect price discrimination. That means,
the monopolist charges each consumer exactly his or her willingness to pay. Draw the
same graph as in part c, show CS, PS, and DWL on your graph and calculate the exact
size of CS, PS, TS, and DWL in this situation. (Fill in the blanks in part h.)
P
Q
TR
MR
TC
MC
Profit
20
30
600
16
240
8
360
18
40
320
g. After the patent right run out, many firms enter the market and sell identical products
16
50
400
in the market. Now the market is assumed to be perfectly competitive. (Fill in the blanks
in part h.) In the long-run, what will be the market price and firms' profit? Briefly
explain why. [Hint: Use the fact that ATC is always 8 in this case.]
14
60
480
12
70
560
b. From the table above, what is the price the monopoly firm would choose?
h. Find the size of CS, PS, TS, and DWL from part e, part f, and part g. Fill in the blanks.
From now on, we will use the function forms of the previous table:
поw
Monopoly
(Part e)
Monopoly with
price discrimination
(Part f)
Perfect Competition
(Part g)
Demand: P = 26 -
Marginal Revenue: MR = 26 -Q
CS
Marginal Cost: MC = 8
PS
c. Draw demand, MR and MC curves on the same graph. (Note: This question does not
TS
DWL
carry any points, because the graph is drawn for you as below. You can use it directly
to answer the following questions.)
Question: According to the table above, is the market outcome efficient when the
P
monopolist conducts the perfect price discrimination? If so, explain why.
26
8
MC
MR
Q
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education