In a linear city, a monopolist can set up as many stores at any location as he likes by incurring a fixedcost for each store. A consumer purchases one unit of good from only one store and receives utilityu = s Pi - td where p is the price of the store he purchases from and d is the distance between theconsumer's location and the store's location. Assume ¼½/4 < ƒ < 1/2.abHow many stores will the monopolist set up?How many stores will a social planner set up?

We are provided with the following information:(a)1. The monopolist incurs a fixed cost ffor each…

Answered: In a linear city, a monopolist can set…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose that a monopolist has a patent for widgets and the demand curve is given by Q(P) = 12 – 0.02P. The monopolist’s total costs are TC(Q) = 25Q^2 + 500. You may assume that widgets are continuously divisible, like corn oil or sand. a: Find the quantity Q* that maximizes the monopolist’s profit by exploiting the marginalcondition, necessary for profit maximization at an interior solution. Neatly show your work.b: Find the price P* that the monopolist charges. Neatly show your work.c: Neatly graph the marginal revenue and marginal cost curves, with Q on the horizontal axis.d: Label relevant areas on your graph using a, b, c, etc. and fill in the following chart.
Question 1. In this question we begin by constructing a competitive market for a good, and then compare the outcome when supply is controlled by a single-price monopolist. Suppose that the demand for units of some beverage comes from households with the preferences over units of the beverage (x1) and expenditure on all other goods (x2) represented by the following utility function, U(x1,x2) = 800 In(x1) + x2 Each household has an exogenous income of I per period. The second 'good' is referred to as a 'composite' good and is an amount of money. We assume throughout that p2 = 1. (4 marks) Derive a household's ordinary demand functions, x1(P1, 1,1) and x2(P1,1,1) when they are price-takers in the market for the beverage. How large does the exogenous income need to be in order for the household to enjoy a positive amount of both 'goods'? i) (2 marks) Suppose there are 80 households who participate in the market for the beverage. Half of the households have an income of $1200 per period,…
Wonderland is the only amusement park in a town. Suppose its marginal cost of providing a ride is constant at $3 and an average visitor's demand for rides is given by D(p) = 32 - 4p. If Wonderland wants to maximize its profit using a two-part tariff, how much should it charge for entry per person and how much should it charge for each ride?
The supply chain for Pappy Van Winkle bourbon is characterized by a monopolist upstream producer and a competitive downstream retail sector. Final consumers’ demand for Pappy Van Winkle bourbon is given as: P=140-2Q, where Q is the number of bottles that are purchased each day. The marginal cost of production (i.e., performing the manufacturing function) can be written as: MCM=30+2Q, and the marginal cost of performing the retail function is MCA=20. Suppose that the two firms are not vertically integrated. Construct the final consumers’ demand curve.
**Practice**
Suppose that a Monopolist is attempting to pioneer the market for a new good. This product is unique enough that there are no close substitutes, and there is no threat of entry. The monopolist anticipates facing the demand function P=80-Q. The monopolist has a fixed cost of 900 and a total variable cost of VC=10Q and marginal cost of MC=10. Suppose the firm considers setting a uniform price to maximize its profit. Will the firm be profitable? Now suppose that the realized demand is lower than the firm anticipated: P=60-Q. Is the firm profitable? Continue to assume that the demand curve is P=60-Q. Fans of the product worry that the firm might go under, and to help save it every consumer agrees to pay his willingness to pay for each unit of output. Is perfect first degree price discrimination enough to save the firm (is the firm profitable under first-degree price discrimination)? Continue to assume that the demand curve is P= 60-Q. Suppose the new good is a Golf Course (so units of…
Suppose that the monopolist can produce with total cost: TC = goods in two different markets separated by some distance. The demand curves in the first market and the second market are given by Q = 120 - 2P, and Q2 = 240 - 2P,. Suppose that consumers can mail the product from cheaper location to a more expensive location freely (mailing cost $0). What would be the monopolist profit? 10Q. Assume that the monopolist sells its $8000 $7200 $6000 $6400
Economics A market comprises two consumers groups: high- demand types and low-demand types. Assume there are 100 consumers of each type. The high types have demand QH = 14 – Pand low types have demand QL = 12 – P. Assume the marginal (and average) cost is 4 and there are no fixed costs. If the monopolist firm is able to distinguish between the two consumer types and using block pricing to extract maximum profit, how much profit will they earn in total? Select one: а. 9000 b. 6800 С. 8200 d. 7200
A movie monopolist sells to college students and other adults. The demand function for students is Q = 1,560 - 100P, and the demand function for other adults is Q = 1,800 - 100P. but who has cost function C(Q) = Q +0.005Q² Marginal cost is MC = 1 + 0.010, where Q=Qs+ QA- Instructions: Round your answers to 2 decimal places as needed. a. What prices will the monopolist set when she can discriminate? Pstudent = $ per ticket. Padult = $ Profit = $ b. What if demand for adults increases to = 2,000 - 100P? Q Pstudent = $ Padult = $ Profit = $ per ticket. O increases. O decreases. per ticket. c. When adult demand increases, the adult price: per ticket. does not change. O decreases. O increases. d. When adult demand increases, the student price: does not change.
If exactly 206 people sign up for a charter flight, Leisure World Travel Agency charges $304/person, However, if more than 206 people sign up for the flight (assume this is the case), then each fare is reduced by $1 for each additional person. Let x denote the number of passengers above 206. Find the revenue function R(x). R(x) = Determine how many passengers will result in a maximum revenue for the travel agency. passengers What is the maximum revenue? $ What would be the fare per passenger in this case? dollars per passenger
A monopolist knows there are two customers with different demand curves for two differently sized bags of potato chips. Customer S would only buy the small bag and has a willingness-to-pay given by P=160-2q (where P denotes the price and q denotes the quantity). Customer L would buy the large bag and has a willingness-to-pay given by P=200-q. The monopolist does not know who is customer S and who is customer L. Marginal cost of production is zero. BEFORE second degree price discrimination, how large are the bags?

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