Industrial EconomicsA prott-maximizing monopolist sells its products in two diferent marketsn the first market, the demand is P, = 70 - 9 in the second market, the demand is P, = 50 - 2 Marginal costs are constant in eachmarket and equal to MC=S10.The total profit that the monopolist will get if it is able to engage in third-degree price discrimination wil beO (a) 2880 $O (b) 3200 SO (c) 2900 SO (d) 3000 SBuccessivo

Third-degree price discrimination occurs when a company charges a different price to different…

Industrial Economics A prott-maximizing monopolist sels its products in two diferent markets n the first market, the demand is P. market and equal to MC=$10 70- in the second market, the demand is P, = 50 - Marginal costs are constant in each The total profit that the monopolist will get if it is able to engage in thind-degree price discrimination wil be O (a) 2880 $ O (b) 3200 S O (c) 2900 $ O (d) 3000 S Buccessivo

Industrial Economics A prott-maximizing monopolist sels its products in two diferent markets n the first market, the demand is P. market and equal to MC=$10 70- in the second market, the demand is P, = 50 - Marginal costs are constant in each The total profit that the monopolist will get if it is able to engage in thind-degree price discrimination wil be O (a) 2880 $ O (b) 3200 S O (c) 2900 $ O (d) 3000 S Buccessivo

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.1P

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Suppose a monopoly market has a demand function in whichquantity demanded depends not only on market price (P) butalso on the amount of advertising the firm does (A, measuredin dollars). The specific form of this function isQ =(20 - P2) (1 + 0.1A - 0.01A2).The monopolistic firm’s cost function is given byC = 10Q + 15 + A.a. Suppose there is no advertising (A = 0). What outputwill the profit-maximizing firm choose? What market price will this yield? What will be the monopoly’sprofits?b. Now let the firm also choose its optimal level of advertising expenditure. In this situation, what output levelwill be chosen? What price will this yield? What will thelevel of advertising be? What are the firm’s profits in thiscase? Hint: This can be worked out most easily by assuming the monopoly chooses the profit-maximizing pricerather than quantity.
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3. Consider a monopolist who faces the following demand: Demand: P= 100 – 10Q MC= 50+20 a) Find the price quantity combination that maximizes profit for the monopolist. b) Is the firm making positive, negative or zero profits? (100,100) Kareem chooses (60, 105) (500, 400) Saleem chooses Kareem chooses (50,420) 4. Calculate the SPNE/SPNES for the game stated above.
Problem 3 uppose an airline has monopoly over a certain route. The estimated price elasticity of demand for business travelers is E-12, while the price elasticity of demand for leisure travelers is Ey-24. The airline wants to set the prices separately for business and vacation travelers. Economy Firat Class Only i the marginal cost of transporting each passenger is the same, und the airline is able to separate the two groups perfoctly, what is the optimal surcharge (in ) on business travelers? Oor example. fleiture travelers pay 100, and business ravelers pay 200, then the surcharge is 100%) Anvwer b) Suppose that in order to separste business travelen, the airline must offer them slightly better conditions on board (for enample, serve them a meal). As a resul, the marginal cost of flying a basiness traveler is 30% higher than for a leivare traveler. What is the optimal surcharge (in ) on business fravelers in this case? Awwer Now suppose the airline introdaces a Basi Economy fare,…
A6
Consider the revenue and cost conditions for a monopolist that are depicted in the figure.a) If price exceeds AVC, what is this producer's profit-maximizing (or loss-minimizing) output?b) What are the firm 's economic profits (or losses)?
Output D 1 2 3 4 5 Maple Choice O Refer to the demand and cost data for a pure monopolist given in the table if the monopolist perfectly price-descriminated and sold each unt of the product at the maximum price the buyer of that unit would be willing t pay, and if the monopolist maximized profits, then the total profit receved would be O 5820 $550 $1,500 Price $420 $900 380 340 300 260 220 Total Cost $250 260 290 350 500 600
A monopolistic firm sells into two markets. The two inverse demand curves are p, = 12 – g, and p, = 12 – 2g3: Assume that the firm cannot charge different prices in the two markets. Then its total revenue will be О a.(24 - 3Q)Q O b.(24- 3P)P Ос. 48- 30 O d. (12 - P)3 2
Cost & Figure 15 Revenue $10 per unit MC $9 $8 АТС $7 $6 $5 $4 $3 $2 $1 MR 2 3 4 7 8 10 Quantity (in thousands) Refer to the above Figure 15 which shows cost curves, a marginal revenue (MR) curve and a demand curve faced by a monopolist. If this monopolist is profit maximizing and does not price discriminate, it will produce ( Select ] v units of output and charge a price of [ Select ] per unit. Given its cost curves, we can tell that this monopolist is currently earning [ Select ] economic profit. According to the classical welfare economics, the socially efficient quantity to be produced in this market would be [ Select ] units of output and a socially efficient price would be [Select ] per unit.
what price must they charge?
7. A monopolist with zero cost, that is c(q) = 0, faces two consumers whose demand functions are given below. 6-P 12-2P (a) Suppose the monopolist cannot engage in any price discrimination. Find the firm's optimal pricing strategy. Calculate the firm's Lerner index. (b) Now, assume that price discrimination is possible. Find the monopolist's optimal first degree price-discrimination strategy. (c) Find the monopolist's optimal second degree price-discrimination strategy.
I need answer of C