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

See similar textbooks

Similar questions

Consider the following problem: Demand: q = 100-p Retailer: marginal cost of selling r = 10 per unit Manufacturer: marginal cost of producing = 40 per unit Neither firm faces any competitor Suppose now that the retailer and the manufacturer are separate firms. Write down the profit function of the manufacturer if it sells to the retailer at w. You solved for the quantity the manufacturer will sell a minute ago, so you can use that in the profit function, and then you will have a profit function for the manufacturer that does not have p, but only has w in it. Solve for the optimal w for the manufacturer to charge and calculate the quantitysold under that w.
Babydrink is a monopolist due to its patent in infant formula. The total cost for production in dollars is given by C(q) = 24q2 + 600q +9600. a) What is the fixed cost? b) Find a function that gives the marginal cost. c) Find a function that gives the average cost. d) Find the efficient scale (that minimizes the average cost). e) Verify it is the most efficient not the least efficient.
Suppose a monopolist operates in a market with two types of consumers (“high” and “low” types) and offers two types of goods (“high quality” and “low quality”). In general, if the monopolist wants to implement second-degree price discrimination (i.e. to sell the “high quality” good to the “high” type consumer and the “low quality” good to the “low” type consumer), they may have to set the price of the “high quality” good lower than the willingness-to-pay of the “high” type.(a) True. (b) False.
A monopolist with cost function C(q) = ;q? faces 2 consumers with the following demands: p(q1) = 10 - q1 and p(q2) = 20 – 2q2. Determine prices, quantities to be produced and sold and the monopolist's profits in the following cases: (a) The good can be resold at zero cost among consumers and it is technologically impossible to sell it in bundles of more than 1 unit. b) There is resale at zero cost and bundling in packages of arbitrary size. c) Resale is possible at a cost of "t" per unit. d) The good is a personal and non-transferable service. e) Repeat the above analysis, but this time assuming that costs are C(q) = q with q < 8.
A store estimates is customer inverse demand is P= 6.1 - 2.6Q, and the marginal cost of each rental is $0.48. If they use block pricing, what should the price be for the entire package?
Suppose that Noah and Naomi have a monopoly in the garden bench market. Their weekly demand is D(P) = 500 - 4P. What is the inverse demand function
A city in a developing country does not have a provider of water and sanitation services, leading to poor health outcomes for its citizens. A firm is considering entering thatmarket. The cost curve is C(g) = 10 + 2q, and the inverse demand is P(g) = 10-q. Thegovernment of that city knows that, because of the high fixed cost to operate in this market, any entrant is likely to become a monopolist. Thus, they decide to implement the following regulation: the firm is not allowed to choose a price above an upper limit of p (which the government chooses and sets in the law before the firm decides to enter).There will be no transfers between the government and the firm.Assume that the firm only enters the market if it can get profits of at least zero, given the government's choice of p. Suppose that the government's goal is to maximize consumer surplus. Which of the following statements is the most correct? The government needs to set p = 2, because it's the marginal cost. That eliminatesthe…
Suppose Bang Bang is the only local swimming pool. She believes that there are 10 potential customers. Each of them has an identical demand function of QI = 250 – 0.02P, with QI as the unit of services of each customer. She operates with a constant variable cost of $500 per unit of service. If Bang Bang can practice a two-part tariff with a membership arrangement, suggest the optimal pricing strategy. Show your calculations
On the market of good Y there are 50 identical consumers. Each consumer has a demand function q=300-2pGood Y is produced by a monopolist, which is operating with a constant marginal cost of 50 and a fixed cost of 2000. Suppose the monopolist implements a two-part tariff pricing strategy. Calculate the maximum profit
You are the manager of a monopolist that produces women shoes and faces a random marginal cost. The demand for women shoes is O = 1000 - 0.1P Marginal cost can be constant at either $60 with a probability of 50% or $40 with a probability of probability of 50%. Draw a graph and plot the demand for shoes. Derive the marginal revenue curve and plot it on the graph. Find the price and output that maximize profits. Find the firm's profits.
A city has two newspapers. Demand for either paper depends on its own price and the price of its rival. Demand functions for papers A and B respectively, measured in tens of thousands of subscriptions, are 21-2Pa + Pb and 21 + Pa-2Pb The marginal cost of printing and distributing an extra paper just equals the extra advertising revenue one gets from another reader, so each paper treats marginal costs as zero. Each paper maximizes its revenue assuming that the other's price is independent of its own choice of price. If the papers enter a joint operating agreement where they set prices to maximize total revenue, by how much will newspaper prices rise? (a) 3 (b) 2 (c) 0 (d) 3.5 (e) 2.5
A city in a developing country does not have a provider of water and sanitation services, leading to poor health outcomes for its citizens. A firm is considering entering that market. The cost curve is C(q) = 10+2q, and the inverse demand is P(q) = 10—q. The government of that city knows that, because of the high fixed cost to operate in this market, any entrant is likely to become a monopolist. Thus, they decide to implement the following regulation: the firm is not allowed to choose a price above an upper limit of p (which the government chooses and sets in the law before the firm decides to enter). There will be no transfers between the government and the firm. Assume that the firm only enters the market if it can get profits of at least zero, given the government's choice of p. Suppose that the government's goal is to maximize consumer surplus. Which of the following statements is the most correct? (a) The government needs to set p = 2, because it's the marginal cost. That…

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS