Price 20 10- 0 Quantity Find the optimal profits. a) 60 b) 59 c) 96 d) 62 10 Assume that the monopoly has two plants-plant 1 and plant 2. Cost function is given for plant c;(9₁)=2+4q, ifg, > 0 i.i=1,2. c;(q;) = 0,otherwise 20
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![The following figure shows the demand for monopolists
Price
20
10
O
Quantity
a) 60
b) 59
c) 96
d) 62
Assume that the monopoly has two plants-plant 1 and plant 2. Cost function is given for plant
c;(q;)=2+4gifq; > 0
1. i=1,2.
c;(q) = 0,otherwise
Find the optimal profits.
10
20](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe75f6c97-b7a3-4eb0-9894-1724e32b9d95%2F173ba1d1-aacf-4088-94b0-8bcd97ab92f2%2Fb9rrmf_processed.jpeg&w=3840&q=75)
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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.A monopolist's demand function is given by D(p) = 90 – 2p. This - monopolist is facing a cost function, C(y) = (1/2)y² + 600. (a) Is this a natural monopoly? Explain. (b) How can government regulate this monopolist to produce the efficient amount of products?5. A monopolist with cost function c(Q)=faces an inverse demand function given by P(Q)= √Q' (a) Find the elasticity of demand with respect to price. (b) Assuming that the monopolist uses MR = MC pricing rule, find his profit maximizing price, p", and output level, q". (c) Find the marginal cost at q" and calculate the Lerner index. (d) Does the monopolist's market power depend on his cost curve? In particu- lar, does it depend on a? Is your answer surprising?
- 1. A monopolist with cost function c(Q) = faces an inverse demand function given by P(Q) = (a) Find the elasticity of demand with respect to price. (b) Assuming that the monopolist uses MR = MC pricing rule, find his profit maximizing price, p", and output level, q™. (c) Find the marginal cost at q" and calculate the Lerner index. (d) Does the monopolist's market power depend on his cost curve? In particu- lar, does it depend on a? Is your answer surprising?part b please A movie theater as a local monopoly faces two groups of moviegoers, students and nonstudents. The students’ demand function for movie tickets is Qs = 200 − 20ps, and thenon-students’ demand function is Qn = 100 − 5pn. The theater incurs zero marginalcost of serving additional customer, but there is a fixed cost of showing a movie at $100.(a) The movie theater charges a uniform ticket price to both students and non-students.(i) Sum the demand functions of the two groups of moviegoers.(ii) To maximize profit, how many tickets will be sold to students and non-studentsand at what price?(iii) What will be the movie theater’s profit from uniform pricing?(b) The movie theater now charges different prices to students and non-students.(i) What could be a means for the movie theater to separate the two groups ofmoviegoers?(ii) To maximize profit, how many tickets will be sold to students and non-studentsand at what prices?(iii) What will be the movie theater’s profit from group…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.
- A monopolist faces a demand curve Q(p) = 13p-4. The marginal cost (MC) is constant at 4 and there is no fixed cost. What is the monopolist's margin m = p-MC? Р (a) m (b) m || - m = 62 334 4 (d) m = 1/1/5 (e) None of the above.The following graph shows the demand (D) for cable services in the imaginary town of Utilityburg. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local cable 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. (? 100 90 Monopoly Outcome 80 70 60 50 40 ATC 30 MC 20 10 MR D 2 6 8 10 12 14 16 18 20 QUANTITY (Number of subscriptions) Which of the following statements are true about this natural monopoly? Check all that apply. O In order for a monopoly to exist in this case, the government must have intervened and created it. O The cable company is experiencing diseconomies of scale. O The cable company is experiencing economies of scale. O It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers. True or False: Without government…3. Suppose the inverse demand function is linear: p(q) = 24-q The monopolist's cost %3D function is c(g)-0.5g*. Assume the monopolist must charge a uniform price. (a) Find the optimum monopoly price and quantity. Also calculate the deadweight loss. (b) Suppose the governmet can levy a lump-sum tax T (i.e., a fixed amount indepen- dent of produetion) and an excise tax t per unit of production on the monopolist. These taxes can be negative, in which case they are subsidies. The proceeds of these taxes can be transferred to consumers. The monopolist is always free to quit the market, in which case she does not have to pay any taxes. The government wants to maximize the ensumer welfare: Pind the optimum vaues of t and
- The demand function for a monopolist is given by x =100 – 4p, where x is the number of units of product produced and sold and p is the price per unit. Find : (1) total revenue function (ii) average revenue function (ii) marginal revenue func- tion and (iv) price and quantity at which MR = 0. 7. A firm knows that the demand function for one of its products is linear. It also knows that it can sell 1000 units when the price is Rs.4 per unit and it can sell 1500 units when the price is Rs.2 per unit. Determine : (i) the demand function (ii) the total revenue function (iii) the average revenue function (iv) the marginal revenue function. 6.The demand curve for a monopolist is given by X 100 4p (i) Find TR, AR and MR (ii) At what value of x, MR is zero (iii) What is the price when MR = 0 %3DIn British Columbia, Canada a company named after Tim Hortons runs a monopoly on a sweet snack called Timbits! Suppose the demand for Timbits is P=90-Q and the cost function is C-Q How much would the consumer surplus, producer surplus and DWL be in case Tim Hortons a single-price monopoly? Suppose Tim Hortons could install a device in its premises that could immediately 11) predict the willingness to pay of every unsuspecting customer entering its franchise premises and charge them that corresponding amount! Additionally, suppose they could also stop resale of products, and thus become a first degree price discriminatıng monopoly. How much would the consumer surplus, producer surplus and DWL be in this case?
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