Question 10 A monopolistie producer of two goods, G and G2, has a joint total cost function TC = 5Q, + 0,02 + 5Q2 Where Q, and Q2 denote the quantities of G, and Gz respectively. If P, and Pz denote the corresponding prices then the demand equations are P, = 40 - Q1 + Q2 P = 20 + 20, - 0. a) Find the total revenue function for each good b) Find the profit function for the firm e) Find the maximum profit if the firm is contracted to produce a total of 12 goods of cither type d) Find the price that the firm is supposed to charge for cach good. e) Estimate the new optimal profit if the production quota increases by 2 units

Question 10 A monopolistie producer of two goods, G and G2, has a joint total cost function TC = 5Q, + 0,02 + 5Q2 Where Q, and Q2 denote the quantities of G, and Gz respectively. If P, and Pz denote the corresponding prices then the demand equations are P, = 40 - Q1 + Q2 P = 20 + 20, - 0. a) Find the total revenue function for each good b) Find the profit function for the firm e) Find the maximum profit if the firm is contracted to produce a total of 12 goods of cither type d) Find the price that the firm is supposed to charge for cach good. e) Estimate the new optimal profit if the production quota increases by 2 units

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.3P

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Question 10A monopolistic producer of two goods, G1 and G2, has a joint total cost function TC = 5Q1 + Q1Q2 + 5Q2Where Q1 and Q2 denote the quantities of G1 and G2 respectivel. If P1 and P2 denote the corresponding prices then the demand equations areP1 = 40 − Q1 + Q2P2 = 20 + 2Q1 − Q2a) Find the total revenue function for each goodb) Find the profit function for the firmc) Find the maximum profit if the firm is contracted to produce a total of 12 goods of either typed) Find the price that the firm is supposed to charge for each good.e) Estimate the new optimal profit if the production quota increases by 2 units
Suppose the following data represent the market demand for catfish: Price (per unit) $20 19 18 17 16 15 14 13 12 11Quantity demanded (units per day) 12 13 14 15 16 17 18 19 20 21Total revenue — — — — — — — — — —Marginal revenue — — — — — — — — — —Compute total and marginal revenue to complete the table above. At what rate of output is total revenue maximized? At what rate of output is MR less than price? At what rate of output does MR first become negative? Graph the demand and MR curves.
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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.
2. The market for dark chocolate us characterized by Cournot duopolists - Honeydukes and Wonka industries. The market demand for dark chocolate is:P = 8 - 0.005Qdwhere P is the price per bar in dollars and Qd is dark chocolate's daily quantity demanded in bars (use qh to represent the quantity of dark chocolate sold by Honeydukes and qw to represent the quantity of dark chocolate sold by Wonka Industries). Honeydukes has a constant marginal cost of $2.50 per bar, while Wonka Industries has a constant marginal cost of $3.00 per bar. The firms move simultaneously in choosing their profit-maximizing quantity of output.a. Given the firms move simultaneously, what is the equation for Honeydukes' reaction function with qh expressed as a function of qw?b. Given the firms move simultaneously, what is the equation for Wonka's reaction function with qw expressed as a function of qh?c. What quantity of dark chocolate will each firm produce in equilibrium and what price will be established for a…
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Refer to Figure 1. If the market price is $2, what the firm will do? Enable Editing 4) Use the figure below to answer the following questions. Price and cost (dollars per unit) 80 MC 60 40 ATC 20 MR 20 40 60 80 100 Quantity (units per week) Figure 2 a) Refer to Figure 2 If this firm is in monopolistic competition, what is its output? b) Refer to Figure 2 If this firm is in monopolistic competition, what is the price it will charge? c) Refer to Figure 2. What is the firm profit situation? What time frame equilibrium is the firm? d) Refer to Figure 2. If this firm in monopolistic competition is in short-run equilibrium, and the firm making profit what will happen in the long run to the firm profit? explain
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In the above figure, the profit-maximizing output and price for this monopolistically competitive firm are
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