Let be the monopoly price and p" be the competitive price. Initially, there are many souvenir shops, each of which charges p (because consumers do not know the shops' prices), and buyers search costs are c. If the government pays for half of consumers' search costs, can there be a single price equilibrium at a price less than P Show that the patent we used to reject a single-price equilibrium at any price except the monopoly price did not depend on the size of the search cost Consider a deviant firm, where all other firms charge a single price (any single price) p where The price,p. below the monopoly price. P is not a single-price equilibrium because a deviant firm can profit, whereby consumers who stop at the deviant store do not search further, from raising da price above pas long as it raises its price by no more than Property format your expression using the tools in the palette Hover over tools to see keyboard shortcuts. Eg, a fraction can be created with the character)

Let be the monopoly price and p" be the competitive price. Initially, there are many souvenir shops, each of which charges p (because consumers do not know the shops' prices), and buyers search costs are c. If the government pays for half of consumers' search costs, can there be a single price equilibrium at a price less than P Show that the patent we used to reject a single-price equilibrium at any price except the monopoly price did not depend on the size of the search cost Consider a deviant firm, where all other firms charge a single price (any single price) p where The price,p. below the monopoly price. P is not a single-price equilibrium because a deviant firm can profit, whereby consumers who stop at the deviant store do not search further, from raising da price above pas long as it raises its price by no more than Property format your expression using the tools in the palette Hover over tools to see keyboard shortcuts. Eg, a fraction can be created with the character)

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.8P

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What quantity will the above monopolist produce if it can first degree price discriminate? (Enter a number) How much consumer surplus do consumers get in the above graph if the monopolist first degree price discriminates? (Enter a number) If the monopolist first degree price discriminates, will the quantity produced by the monopolist be allocatively efficient? (Enter: YES or NO)
Assume that consumers value a high quality piece of furniture at 5000 and a bad quality one at 3000. Assume that producing a bad quality piece of furniture costs the manufacturer 3500 and producing a high quality one costs 5000. . A) If the manufacturer is a monopolist, what will be the equilibrium sales prices on this market? B) How would your answer change, if the cost of producing a low quality piece of furniture went to 2900?
You are a monopolist making a durable good, the widget. Some of your customers have started to sell their used widgets to others. Assume the used and new widgets are perfect substitutes, but with 2 used equivalent to one new widget. a.) what effect would an increase in cost for new widgets have on the price of new and used widgets? b.) You consider trying to get the used widgets market made illegal. If this were done perfectly, how would it affect your monopoly's price and profits? show this graphically and in words
If government mandates P = ATC, are profits positive, negative, or zero? Compared to monopoly pricing, is deadweight loss smaller, larger, or the same size? If government mandates efficient pricing, are profits positive, negative, or zero? Compared to monopoly pricing, is deadweight loss under efficient pricing smaller, larger, or the same size? Compared to a mandate where P = ATC, is deadweight loss under efficient pricing smaller, larger, or the same size? Is this a natural monopoly?
4. If government mandates P = ATC, are profits positive, negative, or zero? Compared to monopoly pricing, is deadweight loss smaller, larger, or the same size? If government mandates efficient pricing, are profits positive, negative, or zero? Compared to monopoly pricing, is deadweight loss under efficient pricing smaller, larger, or the same size? Compared to a mandate where P = ATC, is deadweight loss under efficient pricing smaller, larger, or the same size? Is this a natural monopoly?
Suppose that Comcast has a cable monopoly in Philadelphia. The following table gives Comcast's demand and costs per month for subscriptions to basic cable (for simplicity, we keep the number of subscribers artificially small). Total Marginal Total Marginal Price Quantity 3 Revenue Revenue Cost Cost 68 204 144 64 4 256 52 172 28 60 300 44 204 32 56 336 36 240 36 52 7 364 28 280 40 48 384 20 324 44 Suppose the local government imposes a $99 per month tax on cable companies. What will Comcast do? (Assume fixed costs equal $60.) A. Comcast should produce 6 units in the short run and shut down in the long run. B. Comcast should shut down in the short run and in the long run. c. Comcast should produce 6 units in the short run and in the long run. D. Comcast should shut down in the short run and produce 6 units in the long run. E. None of the above. Suppose that the flat per-month tax is replaced with a tax on the firm of $4 per cable subscriber. (Assume that Comcast will sell only the…
Subject: economics
C. Assume that if electricity is supplied by competitive firms, the market price is 55 and the quantity supplied is 8 (‘000 KWHs)? What is the amount of the deadweight loss to society of producing electricity by monopolist Global Gas and Electric? (It is helpful to have a graphical illustration based on the data above so you could calculate easily the DWL. )
Give typing answer with explanation and conclusion Suppose that a monopolist whose marginal cost curve is MC(Q)=Q faces the demand curve P=10-2Q. What is monopolist's profit-maximizing quantity, profit-maximizing price, the total surplus (under monopoly profit maximization), also called the "monopoly market surplus," and if the monopolist can perfectly price discriminate, then deadweight loss equals...?
Exercise A.6. Mr Smith has a monopoly on housing rentals in a small township. The inverse rental demand function is P=400-2Q. Mr Smith's marginal cost of provisioning rental housing is CM(Q)=3Q+50. Suppose that, to ease the burden on tenants, the local government has set a rental price ceiling of €260. Will consumer surplus increase due to this rent ceiling? Will it increase social welfare? Illustrate your reply graphically.
5. A monopolist is deciding how to allocate output between two markets. The two markets are separated geographically. Demands for the two markets are: P = 12 -Q,, P, = 16–20,. The monopolist's total cost is C= 5 +Q', where Q = Q, +Q,. What are price and output (1) if the monopolist can price discriminate? (2) if the law prohibits charging different prices in the two markets?
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