Problem 3Consider a country called Midwest and is run by a monopolist. Market demand isP = 35 – 4xQp and the monopolist's cost curve is MC = 7 + Qs.a) What is the slope of the monopolist's marginal revenue curve?а. -3b. -1c. -6d. 0e. -8b) What is the monopolist's revenue in equilibrium in autarky?c) Compute consumer surplus in the autarkic equilibrium.For d)-h), suppose export supply is perfectly elastic at PW= 10d) Compute the monopolist's revenue in the free trade equilibrium.e) Compute the increase in consumer surplus by opening up to free trade.f) Compute the quantity imported in free trade.g) Suppose a tariff of 2 is placed on imports. Compute the new quantity imported.h) Consider an import quota equal to your answer in (g). Which statement is most likely:a. Consumer surplus will be higher with the quota than with the tariffb. Consumer surplus will be lower with the quota than with the tariffc. Consumer surplus will be the same with the quota and with the tariff

Problem 3 Consider a country called Midwest and is run by a monopolist. Market demand is P = 35 – 4×Q, and the monopolist's cost curve is MC =7+ Qs. a) What is the slope of the monopolist's marginal revenue curve? а. -3 b. -1 с. -6 d. 0 е. -8 b) What is the monopolist's revenue in equilibrium in autarky? c) Compute consumer surplus in the autarkic equilibrium. For d)-h), suppose export supply is perfectly elastic at P"= 10 d) Compute the monopolist's revenue in the free trade equilibrium.

Problem 3 Consider a country called Midwest and is run by a monopolist. Market demand is P = 35 – 4×Q, and the monopolist's cost curve is MC =7+ Qs. a) What is the slope of the monopolist's marginal revenue curve? а. -3 b. -1 с. -6 d. 0 е. -8 b) What is the monopolist's revenue in equilibrium in autarky? c) Compute consumer surplus in the autarkic equilibrium. For d)-h), suppose export supply is perfectly elastic at P"= 10 d) Compute the monopolist's revenue in the free trade equilibrium.

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter15: Monopoly

Section: Chapter Questions

Problem 7PA

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12) Suppose that a monopolist supplies a product in two distinct markets, LA and NY. The demand functions for the two markets are PLa = 65 – 3QLA and Pvy = 50 – 5QNY. The monopolist has a fixed cost of $10 and a constant marginal cost of $5 per unit. a. If segmenting is feasible, what are the profit-maximizing prices, quantities, and maximized profit? b. If segmenting is NOT feasible, what is the profit-maximizing price, quantity, and maximized profit? c. How much is the difference in total consumer surplus in the two cases? Which case makes consumers better off?
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E3 Let’s assume a monopolist has the following inverse demand curve:p = 248 −3qand the following cost curve:T C = 8q + q^2(a) Calculate the marginal revenue and marginal cost for this firm.(b) Let’s assume the firm chose to operate in a perfectly competitive market. If that was true,what is the equilibrium price and quantity?(c) Graph the demand curve, marginal revenue, and marginal cost for the perfectly competitivemarket. Show the optimal quantity and price on the graph.(d) Calculate the consumer surplus, producer surplus, and deadweight loss in this market.(e) Now, let’s assume the firm chose to operate as a monopolist. If that was true, what is theequilibrium price and quantity?(f) Graph the demand curve, marginal revenue, and marginal cost for the monopolist market.Show the optimal quantity and price on the graph.(g) Calculate the consumer surplus, producer surplus, and deadweight loss in this market.
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