Monopoly, Practice Question rm P is a monopolist for a new drug that makes people feel thinner, the total cost nction is C(q) = 200 + 10Q + Q² e inverse demand function is p(Q) = 82-Q By how much do revenues increase if this firm sells one more (small) unit of output? y how much does its cost go up if it produces one more (small) unit of output? What is the optimal price and quantity the monopolist should charge and sell? What is the profit the monopolist makes? Should the firm shut down in the short or ng run?
Monopoly, Practice Question rm P is a monopolist for a new drug that makes people feel thinner, the total cost nction is C(q) = 200 + 10Q + Q² e inverse demand function is p(Q) = 82-Q By how much do revenues increase if this firm sells one more (small) unit of output? y how much does its cost go up if it produces one more (small) unit of output? What is the optimal price and quantity the monopolist should charge and sell? What is the profit the monopolist makes? Should the firm shut down in the short or ng run?
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter14: Monopoly
Section: Chapter Questions
Problem 12PA
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![2. Monopoly, Practice Question
Firm P is a monopolist for a new drug that makes people feel thinner. the total cost
function is
C(Q) = 200 + 10Q + Q²
The inverse demand function is
p(Q) = 82 - Q
(a) By how much do revenues increase if this firm sells one more (small) unit of output?
By how much does its cost go up if it produces one more (small) unit of output?
(b) What is the optimal price and quantity the monopolist should charge and sell?
(c) What is the profit the monopolist makes? Should the firm shut down in the short or
long run?
(d) If the company increases its price by a small fraction (let us say 1%), by what
proportion does demand go down? [Round to two decimal places.]
(e) What percentage of the price is due to costs and what is due to markup? [Round to
two decimal places.]
(f) What is the deadweight loss of the monopoly pricing compared to competitive prices?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe5223232-73c8-4c76-ada2-fbad1d527f7c%2Fdce6c31b-11d9-49d7-b866-5604edd60743%2F8u8l4y8_processed.png&w=3840&q=75)
Transcribed Image Text:2. Monopoly, Practice Question
Firm P is a monopolist for a new drug that makes people feel thinner. the total cost
function is
C(Q) = 200 + 10Q + Q²
The inverse demand function is
p(Q) = 82 - Q
(a) By how much do revenues increase if this firm sells one more (small) unit of output?
By how much does its cost go up if it produces one more (small) unit of output?
(b) What is the optimal price and quantity the monopolist should charge and sell?
(c) What is the profit the monopolist makes? Should the firm shut down in the short or
long run?
(d) If the company increases its price by a small fraction (let us say 1%), by what
proportion does demand go down? [Round to two decimal places.]
(e) What percentage of the price is due to costs and what is due to markup? [Round to
two decimal places.]
(f) What is the deadweight loss of the monopoly pricing compared to competitive prices?
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