Please note: I had to adjust the MC and ATC curves on this problem, but the labels for MC and ATC did not move. So, the dark blue line is the ATC line, and the red line is the MC line. Calculate the firm's profit if they are a single-price monopoly: Profit = $ Calculate the firm's profit if they are a perfect price discriminating monopoly: Profit = $ Calculate the firm's profit if they price discriminate as follows: Sell the first 2500 units at a high price and the rest of the units at a low price: Profit = $ Calculate the firm's profit if they price discriminate as follows: Sell the first 2000 units at a high price, the next 1000 units at a medium price, and the rest of the units at a low price: Profit = $ 30- 28- 26- Price and cost (dollars per unit) 24- 22- 20- 18-17.5 16- 14- 12- 10- 8- 6- 4- 2- 0+ 0.0 MC ATC $2.5 MR 1.0 2.0 3.0 4.0 5.0 Quantity (thousands of units per year) D 6.0

Please note: I had to adjust the MC and ATC curves on this problem, but the labels for MC and ATC did not move. So, the dark blue line is the ATC line, and the red line is the MC line. Calculate the firm's profit if they are a single-price monopoly: Profit = $ Calculate the firm's profit if they are a perfect price discriminating monopoly: Profit = $ Calculate the firm's profit if they price discriminate as follows: Sell the first 2500 units at a high price and the rest of the units at a low price: Profit = $ Calculate the firm's profit if they price discriminate as follows: Sell the first 2000 units at a high price, the next 1000 units at a medium price, and the rest of the units at a low price: Profit = $ 30- 28- 26- Price and cost (dollars per unit) 24- 22- 20- 18-17.5 16- 14- 12- 10- 8- 6- 4- 2- 0+ 0.0 MC ATC $2.5 MR 1.0 2.0 3.0 4.0 5.0 Quantity (thousands of units per year) D 6.0

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Provide an example of a product or service that operates as a monopoly. Explain your answer. What barrier to entry helped create this monopoly?
The following diagram illustrates the demand curve facing a monopoly in an industry with no economies or diseconomies of scale and no fixed costs. In the short and long run, MC = ATC. 1.) Using the point drawing tool, indicate the monopoly output and monopoly price (Monopoly) in the figure to the right. Attach the appropriate provided label. 2.) Using the rectangle drawing tool, shade in monopoly profits (Profit). Attach the appropriate provided label. 3.) Using the triangle drawing tool, shade in the "excess burden" or "welfare costs" of the monopoly (Excess burden). Attach the appropriate provided label. Note: Carefully follow the instructions above and only draw the required objects. The monopoly creates excess burden because O A. it produces where price equals marginal cost. B. it produces an inefficiently large amount of output. O C. it charges a price that is too low. D. it produces where marginal cost is positive. E. it produces where price is above marginal cost. MR Output, Q…
↑ If a monopoly faces an inverse demand curve of p=270-Q has a constant marginal and average cost of $90, and can perfectly price discriminate, what is its profit? What are the consumer surplus, welfare, and deadweight loss? How would these results change if the firm were a single-price monopoly? Profit from perfect price discrimination (x) is $ 16.200 (Enter your response as a whole number) Corresponding consumer surplus is (enter your response as whole numbers): welfare is and deadweight loss is CS=$ W-s OWL-S
Use the following Table showing the demand schedule for a monopolist facing a constant marginal cost of $4. Assume that the firm pays no fixed costs. How many units of output will the firm produce, and how much economic profit will be earned? Quantity Demanded 1 2 3 4 5 6 7 8 9 Price $12 $11 $10 $9 $8 $7 $6 $5 $4 A) 5 units; $8 B) 5 units; $40 C) 7 units; $36 D) 7 units; -$6 E) 5 units; $20
Do not use Ai
Suppose a monopoly firm’s total cost of production TC = f + c•Q where f > 0 and c > 0. Is this firm a “natural monopoly”? Answer ‘Yes” or “No” based on your explanation of the meaning of a “natural monopoly.”
The following diagram illustrates the demand curve facing a monopoly in an industry with no economies or diseconomies of scale and no fixed costs. In the short and long run, MC = ATC. 1.) Using the point drawing tool, indicate the monopoly output and monopoly price (Monopoly) in the figure to the right. Attach the appropriate provided label. 2.) Using the rectangle drawing tool, shade in monopoly profits (Profit). Attach the appropriate provided label. 3.) Using the triangle drawing tool, shade in the "excess burden" or "welfare costs" of the monopoly (Excess burden). Attach the appropriate provided label. Note: Carefully follow the instructions above and only draw the required objects. The monopoly creates excess burden because A. it produces where marginal cost is positive. B. it produces where price equals marginal cost. OC. it produces an inefficiently large amount of output. D. it produces where price is above marginal cost. E. it charges a price that is too low. Click the graph,…
3 A. Write down the uncovered interest parity (UIP) relationship explaining each symbol used. B. Assume the exchange rate is allowed to fluctuate freely, draw two figures one showing the IS-LM model, and the other the UIP. Explain the UIP figure. C. Using the above figures, illustrate and what effect monetary contraction has on the domestic output, and exchange rate; and EXPLAIN INTUITIVELY (i.e., by economic relationships) these effects.
The following graph gives the demand (D) curve for water services in the fictional town of Streamship Springs. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local water company, a natural monopolist. On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist. ? PRICE (Dollars per hundred cubic feet) 9 36 32 28 24 20 16 12 0 MR 2 3 5 6 7 a QUANTITY (Hundreds of cubic feet) ATC MO 10 + Monopoly Outcome
Lagatt Green is a monopoly beer producer and distributor operating in the hypothetical economy of Lightington. Assume that Lagatt Green is not able price discriminate, and so it sells its beer to all customers at the same price per bottle. The following graph gives the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) curves that Lagatt Green faces for beer in Lightington. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for Lagatt Green. If Lagatt Green is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if Lagatt Green is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. PRICE (Dollars per bottle) 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 D MC D 15 20 25 30 3.5 QUANTITY (Thousands of bottles of beer) 45 ATC MR Price (Dollars per bottle) 2.00 2.25 40 Monopoly Outcome…
You are the manager of a monopoly. Your analytics department estimates that a typical consumer's inverse demand function for your firm's product is P = 350-20Q, and your cost function is C(Q) = 70Q. a. Determine the optimal two - part pricing strategy. Per-unit fee: $ Fixed fee: $ b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per- unit price? $
A firm is a natural monopoly. Its marginal cost curve is flat, and its average cost curve is downward sloping (because it has a fixed cost). The firm can perfectly price discriminate. Use a graph to show how much the monopoly produces, Q*. Show graphically and mathematically that a monopoly might shut down if it can only set a single price but operate if it can perfectly price discriminate.