Once a monopolist has determined its profit-maximizing (equilibrium) quantity of output, QM, which condition does it use to set the price? Question 9Answer a. None of the other options are correct b. Price = Demand at QM c. Price = Average Cost at QM d. Price = Marginal Cost at QM
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Once a monopolist has determined its profit-maximizing (equilibrium) quantity of output, QM, which condition does it use to set the price?
Question 9Answer
None of the other options are correct
Price = Demand at QM
Price = Average Cost at QM
Price = Marginal Cost at QM
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- Give typing answer with explanation and conclusion A monopolist has a demand curve given by P = 88 − Q and a total cost curve given by TC = 34 + Q2. The associated marginal cost curve is MC = 2Q. Suppose the monopolist also has access to a foreign market in which he can sell whatever quantity he chooses at a constant price of 60. How much will he sell in the foreign market? What will his new quantity and price be in the original market?What is meant by the term “market power”? Can a monopolist charge any price it wants because it is the only seller? What is the profit maximizing /loss minimizing rule a firm should follow regardless of the market structure within which the firm is operating? If the monopolist is incurring a short run economic loss, what are some options the monopolist has?A monopolist faces a demand curve, Q=100-2P and has a constant marginal cost of 10. It has no fixed costs. a. If the monopolist can only charge a single price, it should charge P*= v and produce Q*= v units. b. If the monopolist can charge a separate price for any units sold beyond Q*, then the price of these additional units will lead to additional profit if it is any price in the range of v.A monopolist that charges a separate price for additional units is practicing v price discrimination. c. Now suppose that the monopolist can perfectly price discriminate. What quantity will it produce? d. In terms of social welfare, total surplus will be highest in the pricing scheme described in part v and lowest in the pricing scheme described in part e. In terms of profitability, profit will be highest in the pricing scheme described in part v and lowest in the priceing scheme described in part
- Assume a monopolist with downward-sloping demand and marginal revenue (MR) curves. The monopolist operates with standard marginal cost (MC) and average total cost (ATC) curves. How does a monopolist determine the profit-maximizing output level and the corresponding profit-maximizing price? A. The output level occurs where MR-MC and price is determined from the demand curve at this output level OB. The output level occurs where Demand = MC and price is determined from the marginal revenue curve at this output level. OC. Both the output level and price are found where MR = MC. OD. Both the output level and price are found where Demand = MC.Suppose that the monopolist's demand is: P = 8 – Q, and marginal revenue is: MR = 8 – 2Q. - The marginal cost is: MC = 2, and there is no fixed cost. a.Find out the profit maximizing output level. b.Specify the amount of economic profit or loss at the profit maximizing output. c.Calculate the price elasticity of demand at the profit maximizing point and explain it.The region of demand in which the monopolist will choose a price-output combination will be: elastic because as price declines and output increases, total revenue will decrease. O inelastic because as price declines and output increases, total revenue will decrease. Oelastic because as price declines and output increases, total revenue will increase. inelastic because as price declines and output increases, total revenue will increase.
- How can a monopolist maximize its profits? a.) Produce maximum output where marginal cost and price are equal. b.) Finding the output where MR = MC and producing and charging the price corresponding to that output level on the demand curve. c.) Setting the price at the demand curve's highest point and output where MR = MC. d.) Setting the price level where marginal cost is minimized.Exercise 3.3. Suppose a profit-maximizing monopolist is producing 800 units of output and is charging a price of $40 per unit. a. If the elasticity of demand for the product is -2, find the marginal cost of the last unit produced. b. What is the firm's percentage markup of price over marginal cost? c. Suppose that the average cost of the last unit produced is $15 and the firm's fixed cost is $2000. Find the firm's profit.A monopolist serves a market with five potential buyers, each of whom would buy at most one piece of the monopolist's good. Anna would be willing to pay up to £80 for it, Bob up to £90, Chloe up to £100, Dave up to £110 and Elizabeth up to £120. The monopolist's variable cost function is given in below table. Quantity Variable Costs 1 3. 4. 40 90 150 220 300 Price Marg. Revenue a) Indicate in the table which price the monopolist would want to charge for each given quantity. b) Find the marginal revenue for each quantity. c) Find the monopolist's profit maximising price under the assumption that he wants to produce anything at all. d) How large can the monopolist's fixed costs be such that he still wants to start producing at 1. D Focus 9°C Sun