**YOU ONLY HAVE TO ANSWER QUESTION H** 1. JA monopoly firm holding a patent right faces a market demand given in the table. Weassume there is no fixed costs and the monopolist maximizes profit.a. Fill in the blanks. [Hint: MR = , MC = You may want to construct columnsAQfor AQ, ATR, and ATC to find MR and MC.]PTRMRTCMCProfit2030600162403601840720123208400165080084008400146084044808.36012708405608280b. From the table above, what is the price the monopoly firm would choose?ANSWER: 16$From now on, we will use the function forms of the previous table:Demand: P = 26 –eMarginal Revenue: MR = 26 –QMarginal Cost: MC = 8c. Draw demand, MR and MC curves on the same graph. (Note: This question does notcarry any points, because the graph is drawn for you as below. You can use it directlyto answer the following questions.)MCMRQ. d. Calculate the monopoly firm's optimal price and quantity using the given functions.ANSWER: Optimal price: $17Quantity: 45 unitse. Show CS, PS, and DWL on your graph in part c. Calculate the exact size of CS, PS, TS,and DWL. (Fill in the blanks in part h.)f. Now the monopolist decides to conduct the perfect price discrimination. Thatmeans, the monopolist charges each consumer exactly his or her willingness to pay.Draw the same graph as in part c, show CS, PS, and DWL on your graph and calculatethe exact size of CS, PS, TS, and DWL in this situation. (Fill in the blanks in part h.)g. After the patent right run out, many firms enter the market and sell identicalproducts in the market. Now the market is assumed to be perfectly competitive. (Fillin the blanks in part h.) In the long-run, what will be the market price and firms'profit? Briefly explain why. [Hint: Use the fact that ATC is always 8 in this case.]ANSWER: Market price: 17$Firms' profit: 405$**YOU ONLY HAVE TO SOLVE QUESTION H, WHICH IS BELOW.h. Find the size of CS, PS, TS, and DWL from part e, part f, and part g. Fill in the blanks.Monopoly withpricePerfectMonopoly(Part e)Competition(Part g)discrimination(Part f)CSPSTSDWLQuestion: According to the table above, is the market outcome efficient when themonopolist conducts the perfect price discrimination? If so, explain why.

Perfect competition is the market structure in which there is large number of buyers and sellers…

h. Find the size of CS, PS, TS, and DWL from part e, part f, and part g. Fill in the blanks. Monopoly with price Perfect Monopoly (Part e) Competition (Part g) discrimination (Part f) CS PS TS DWL Question: According to the table above, is the market outcome efficient when the monopolist conducts the perfect price discrimination? If so, explain why.

h. Find the size of CS, PS, TS, and DWL from part e, part f, and part g. Fill in the blanks. Monopoly with price Perfect Monopoly (Part e) Competition (Part g) discrimination (Part f) CS PS TS DWL Question: According to the table above, is the market outcome efficient when the monopolist conducts the perfect price discrimination? If so, explain why.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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