Consider the diagram below: price/cost 260 taka 220 taka 175 taka 55 110 MR MC=ATC D a) If a firm is single -price monopolist, what price firm will charge and what is the profit maximizing output? Calculate the area of monopolist's profit (in tk), consumer surplus (in tk) and deadweight loss (in tk) from the information of the diagram. b) If the firm would work as a perfectly price discriminating monopolist, what amount of output firm would have produced? How firm would have charged price? Calculate the area of consumer surplus (in tk), profit(in tk) and deadweight loss (in tk) from the information of the diagram. c) From your calculations in a) and b) which market structure has the highest welfare cost for a firm? Give adequate reason from your calculation. d) From your calculations in a) and b), which market structure has the highest profit and the lowest consumer surplus at the same time? Why it happens? [Show the breakdown of your calculations for a) and b)]

Consider the diagram below: price/cost 260 taka 220 taka 175 taka 55 110 MR MC=ATC D a) If a firm is single -price monopolist, what price firm will charge and what is the profit maximizing output? Calculate the area of monopolist's profit (in tk), consumer surplus (in tk) and deadweight loss (in tk) from the information of the diagram. b) If the firm would work as a perfectly price discriminating monopolist, what amount of output firm would have produced? How firm would have charged price? Calculate the area of consumer surplus (in tk), profit(in tk) and deadweight loss (in tk) from the information of the diagram. c) From your calculations in a) and b) which market structure has the highest welfare cost for a firm? Give adequate reason from your calculation. d) From your calculations in a) and b), which market structure has the highest profit and the lowest consumer surplus at the same time? Why it happens? [Show the breakdown of your calculations for a) and b)]

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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