Ignore AFC and AVC 2. Suppose a pure monopolist faces the following demand schedule and the same cost data as the competitive producer discussed in problem 4 at the end of Chapter 10. Calculate the missing TR and MR amounts, and determine the profit-maximizing price and profit-maximizing output for this monopolist. What is the monopolist's profit? Verify your answer graphically and by comparing total revenue and total cost. LO11.4 Average Total Average Variable Average Marginal Product Fixed Cost Cost Total Cost Cost 0 $45 1 $60.00 $45.00 $105.00 40 2 30.00 42.50 72.50 3 20.00 40.00 60.00 4 15.00 37.50 52.50 5 12.00 37.00 49.00 6 10.00 37.50 47.50 45 7 8.57 38.57 47.14 00 8 7.50 40.63 48.13 10 96 6.67 43.33 50.00 GGG u w u 35 30 35 40 55 65 75 6.00 46.50 52.50 Price Quantity Demanded Total Revenue Marginal Revenue $115 0 100 1 83 2 3 63 55 48 42 52 233 2 37 4 5 6 7 8 9 10 $ $

Ignore AFC and AVC 2. Suppose a pure monopolist faces the following demand schedule and the same cost data as the competitive producer discussed in problem 4 at the end of Chapter 10. Calculate the missing TR and MR amounts, and determine the profit-maximizing price and profit-maximizing output for this monopolist. What is the monopolist's profit? Verify your answer graphically and by comparing total revenue and total cost. LO11.4 Average Total Average Variable Average Marginal Product Fixed Cost Cost Total Cost Cost 0 $45 1 $60.00 $45.00 $105.00 40 2 30.00 42.50 72.50 3 20.00 40.00 60.00 4 15.00 37.50 52.50 5 12.00 37.00 49.00 6 10.00 37.50 47.50 45 7 8.57 38.57 47.14 00 8 7.50 40.63 48.13 10 96 6.67 43.33 50.00 GGG u w u 35 30 35 40 55 65 75 6.00 46.50 52.50 Price Quantity Demanded Total Revenue Marginal Revenue $115 0 100 1 83 2 3 63 55 48 42 52 233 2 37 4 5 6 7 8 9 10 $ $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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You manage one of three firms in a market. You expect that one of the other firms will produce 20 units of output and the other firm will produce 10 units of output. Your monopoly quantity is 40. How much output should your firm produce given your expectations regarding the output levels of the other two firms? O 25 O 15 O 30 O 40
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5- Use the figure below to answer the following questions. Price (dollars per unit) 100 80 60 40 20 O 20 MC MR 40 D 60 80 Quantity (units per week) Figure 3 a) Refer to Figure 3. If this market is perfectly competitive, the output level exceeds the single-price monopoly output level by how much? b) Refer to Figure 3. What is the allocative efficient quantity? c) Refer to Figure 3. If this market is a single-price monopoly, then what statement can be made about economic efficiency? Please explain your answer.
3. Consider a market in which a monopolist would charge at a price of $10 for a particular good. Assume now the market is currently dominated by a pair of Bertrand duopolists who produce identical goods and compete on price in a one-shot game. They both face a marginal cost of $5. They start with colluding and agreeing to charge the monopoly price of $10 in an effort to maximize their profits. In equilibrium, the market price of the good will be.... (a) Over $10 (b) $10 (c) Between $5 and $10 (d) $5 (e) Less than $5 (f) None of the above Answer: 3d. A price war will break out, lowering the price to $5.
Exhibit 9-4: A Monopoly Total Quantity Total Fixed Variable Price Demanded Cost Cost $100 $30 $0 90 $30 20 80 $30 48 70 $30 78 60 4 $30 110 50 5 $30 150 Refer to Exhibit 9-4. At an output level of 5 units, the monopolist earns a total profits of about O S70.00 S82.00 O $100.00 O $102.00
q 0 1 2 3 4 5 6 TFC $5 5 5 5 5 5 5 TVC $0 3 LO 5 9 16 25 36 MC - $3 2 4 7 9 11 P = MR $5 5 5 5 LO 5 5 5 A profit-maximizing firm should produce a quantity of TR $0 5 10 15 20 25 30 TC $5 8 10 14 21 30 41 Profit $-5 - 3 0 1 - 5 11 units. (Enter your response as a whole number.)
Firm A and B both produce good Q. Demand is Q-45-0.5P, where P is price. Both firms have total cost TC = 6 + 16Q₁, where i A,B. If the firms collude to produce the monopoly output, the resulting consumer surplus is? O342.25 O 354.75 O 362.22 370.74
5. Individual Problems 9-5 Describe the difference in economic profit between a competitive firm and a monopolist in both the short and long run. Which should take longer to reach the long-run equilibrium? In the short run, both monopolists and competitive firms can competitive firms, but not monopolists earn positive economic profits. In the long run, can earn a positive economic profit. True or False: The adjustment to long-run equilibrium takes the same amount of time for monopolies and competitive industries. True O False
Suppose you have been tasked with regulating a single monopoly firm that sells 50-pound bags of concrete. The firm has fixed costs of $10 million per year and a variable cost of $6 per bag no matter how many bags are produced. Instructions: Enter your answers as a whole number. In part e, round your answer to two decimal places. a. If this firm keeps increasing its output level, will ATC per bag ever increase? No = Are there economies of scale at all levels of output? No ÷ b. If you wished to regulate this monopoly by charging the socially optimal price, what price would you charge? $ per bag At that price, the size of the firm's profit would be $ million. Will the firm want to exit the industry? No c. You find out that if you set the price at $7 per bag, consumers will demand 10 million bags. At that price, the firm's profit or loss will be $ million. d. If consumers instead demanded 20 million bags at a price of $7, how big would the firm's profit or loss be? At that price, the size…