In the model of first-degree price discrimination (the “unrealistic” one where the monopolist knows each consumer’s willingness-to-pay and can set price specific to each consumer), the allocation is efficient—that is, there is no deadweight loss.(a) True. (b) False.
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In the model of first-degree
(a) True. (b) False.
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- All 20 consumers are alike and each has a demand curve for a monopolist's product of p=15 -3q. The cost of production C(Q) =2Q. Let the monopolist charge a price of $PM for qM unit purchased. Find the menu prices that maximize profits? (The buyer pays menu price PM for quantity qM) What is the maximum profit the monopolist can earn in this market? (pi)?A monopolist faces linear demandp = a - Bq and has cost C = cq + F, where all parameters are positive, a > c, and (a – c)? > 4BF. (a) Solve for the monopolist's output, price, and profits. (b) Calculate the deadweight loss. Assume now the government requires this firm to set the price that maximizes the sum of consumer surplus and producer surplus, and to serve all buyers at that price. (c) What is the price the firm must charge? (d) Calculate the firm's profit (or loss) under this regulation. Is this form of regulation sustainable in the long run?A perfect price discriminating monopolist is able to Question 14 options: a) produce where the price of the last unit sold is equal to marginal cost b) maximize profit and capture all consumer surplus c) produce a socially optimal level of output commensurate to that of perfect competition d) all of the above
- 1. A monopolist serves two individuals, A and B. Individual demands are defined by p = 7-9 and PB = 42q, respectively. The monopolist's total cost of production is defined by TC(q + 9) = 2(a +98). Suppose that price discrimination is not possible. a. C ) Sketch market demand and the monopolist's marginal revenue of output. b. ( Find (p, q) and indicate the solution on the graph. State whether anyone is excluded.A monopolist demand is D = P = $40 - $.25Qm; AC = MC = $5. The profit-maximizing price (P) and output (Q) are:part C D
- The monopolist must decrease price on all units of a product sold in order to sell additional units. This explains why: a monopoly has a perfectly elastic demand curve. (Omarginal revenue is less than price or average revenue. there are barriers to entry in monopoly. total revenues are greater than total costs at the profit maximizing level of output.(a) A monopolist has discovered that the inverse demand function of a person with income Y for the monopolist’s product is P = 0.002Y-Q where P is the price, Y the income, and Q is the output. The monopolist can observe the incomes of its consumers and hence vary its price accordingly. The monopolist has a total cost function C(Q) = 100Q. Calculate the profit maximising price as a function of the consumer’s income Y carefully explaining all the steps in the derivation of the formula. (b) A monopolist has a constant marginal cost of £2 per unit and no fixed costs. He faces two separate markets in the United States and in the UK. The goods sold in one market are never resold in the other. He sets one price P1 for the US market and another price P2 for the UK market (both measured in £). The demand in the United States is given by Q1=7,000-700P1 and the demand in the UK is given by Q2=1,200-200P1. Calculate the profit maximising output produced and price charged in each country by the…Exercise A.2. Suppose a company that is the only producer in a given sector of activity and can produce with an average and marginal cost of €10. The company faces a market demand curve given by Q=100-P. a) What is the price range in which this monopolist will operate? Why? b) Get the amount you will produce and the sale price you will charge. Calculate its benefits? Represent graphically.
- A monopolist facing a demand p=1000 - 10Q has costs TC(Q) = 5Q^2 + 100Q. (a) What is the monopolist’s profit maximizing quantity and price? What is the induced DWL? (b) Suppose, on top of the costs above, the firm now also pays; (i) A flat fee of 1000 dollars, (ii) half of the profits, (iii) 150 dollars per unit sold, (iv) half of the revenue. Separately for each of these 4 cases, calculate the profit maximizing price and quantity for the monopolist with these new augmented costs. Does any of these scenarios alter the DWL associated with the monopoly, compared to (a)? (c) Forget about (a) and (b), and consider a monopoly in general. Show on a single graph with general costs (ATC and MC graphs) and a general demand, what quantity monopoly should produce in order to maximize ; (i) Total Revenue, or (ii) the number of units sold, under the condition that the firm does not make lossesQuestion 1 ( A monopolist sells Soma at the same price into two different markets. The inverse demand for Soma in market #1 is denoted p1(g) = 15 – q. The demand for Soma in market #2 is given by D2(p) = 80 – 3p. Assume the monopolist's cost function is C(q) = log(1 + q), where q represents the total quantity produced. (Note: (1) log denotes natural logarithm; (2) Round all answers to 2 decimal places.) 1. What is the profit maximizing quantity for the monopolist? 1 Answer:. Justification:A monopolist produces a unique product in three different plants, each with its own marginal cost structure. The overall market demand for the product is governed by the demand function = 128 - 8* P,where is the total quantity demanded, and Pis the market price. To meet this demand, the monopolist must decide on the allocation of production quantities Q1, Q2 and Q3 across Plant 1, Plant 2, and Plant 3 respectively. The marginal costs (MC) for producing the good in each plant are as follows: MC₁ = 1, MC₂ = 1 + 2 and MC3Q3. How many units should the monopolist optimally produce in Plant 1 to contribute to the total market demand 62 units O unit 63 units
