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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)]

Microeconomics: Private and Public Choice (MindTap Course List)
Microeconomics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter11: Price-searcher Markets With High Entry Barriers
Section: Chapter Questions
Problem 15CQ
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Consider the diagram below: price/cost 260 taka 220 taka 175 taka MC=ATC 55 110 MR 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)]
Transcribed Image Text:Consider the diagram below: price/cost 260 taka 220 taka 175 taka MC=ATC 55 110 MR 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)]
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