Suppose a firm is a monopoly. Its marginal cost curve is flat, and its average cost curve is downward sloping (because it has a fixed cost). 1.) Using the point drawing tool, indicate the monopoly's profit-maximizing price and quantity in the figure if it cannot price discriminate. Label this point 'e..' 2.) Using the rectangle drawing tool, indicate the monopoly's losses at the no price discrimination profit-maximizing price and quantity. Label this rectangle 'Losses,." 3.) Using the point drawing tool, indicate the monopoly's profit-maximizing quantity in the figure if it perfectly price discriminates and the price charged for the last unit produced. Label this point 'e2. 4.) Using the triangle drawing tool, indicate the monopoly's producer surplus with perfect price discrimination. Label this triangle 'PS2. Carefully follow the instructions above, and only draw the required objects. price, $ per ticket AC MR Q. Tickets per concert DMC G

Suppose a firm is a monopoly. Its marginal cost curve is flat, and its average cost curve is downward sloping (because it has a fixed cost). 1.) Using the point drawing tool, indicate the monopoly's profit-maximizing price and quantity in the figure if it cannot price discriminate. Label this point 'e..' 2.) Using the rectangle drawing tool, indicate the monopoly's losses at the no price discrimination profit-maximizing price and quantity. Label this rectangle 'Losses,." 3.) Using the point drawing tool, indicate the monopoly's profit-maximizing quantity in the figure if it perfectly price discriminates and the price charged for the last unit produced. Label this point 'e2. 4.) Using the triangle drawing tool, indicate the monopoly's producer surplus with perfect price discrimination. Label this triangle 'PS2. Carefully follow the instructions above, and only draw the required objects. price, $ per ticket AC MR Q. Tickets per concert DMC G

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Graphically show a monopoly firm that currently sells 250 units of output at a price of $60/unit, where the marginal revenue of the 250th unit is $40, the marginal cost of the 250th unit is $50, and the average total cost at 250 units is $60. [Hint: Based on the information given, is the quantity you’re asked to show the profit-maximizing quantity? Think about what has to be true for profit-maximization.] Based on the graph and assuming the firm attempts to profit maximize (and succeeds), what would happen to price, quantity, MR, MC, and ATC? (rise, fall, or stay the same?)
Suppose that a monopolist’s demand curve is given by P(y) = 28−3y and its marginal cost is given by MC(y) = y, where y denotes output.a. Find the profit-maximizing quantity and price for this monopolist. Illustrate your answer with a graph.b. Calculate the consumer surplus, producer surplus and thedeadweight loss of this monopoly. (You may find it helpful to refer tothe graph you drew for part a.)c. Carefully explain why a monopoly creates a deadweight loss.
3. Call Your Aunt is a monopoly seller of deli sandwiches. In DC, the demand curve is p = 16 In Maryland, it is p y Marginal cost is 4. = 12 100 100 (i) Find the profit-maximizing prices under third-degree price discrimination. (ii) Find the profit-maximizing uniform price. (iii) Now 14 – By, where B is a positive constant. Without calculating the new profit-maximizing uniform price, explain whether it is higher or lower than in (ii). suppose that Call Your Aunt starts to sell in Virginia. The demand curve is p
The graph to the right includes a monopolist's demand, marginal revenue, average total cost, and marginal cost curves. 1.) Use the point drawing tool to Indicate the profit-maximizing level of output and price. Label this point 'Point A' 2.) Use the rectangle drawing tool to shade in economic profitsLabel this shaded area 'Profit'. Carefully follow the instructions above, and only draw the required objects.
Assume the following equations describe the conditions for a monopoly: Qd = 2,000 - 100P TC = 3,500 + 5q + .005q2 Where Qd is the quantity demanded, P is the commodity's price in dollars, TC is the firm's total cost in dollars and q is the quantity of output produced. Based upon these equations, answer the following questions: a. What is the firm's equation for total revenue expressed as a function of quantity? b. What is the firm's equation for marginal revenue expressed as a function of quantity? What is the firm's equation for marginal cost expressed as a function of quantity? c. What is the firm's profit maximizing quantity of output? d. What price will the firm charge for the commodity? e. What would be the socially optimal quantity of output? f. What price would regulators have to establish in order to have the firm produce the socially optimal quantity of output?
Price and cost (dollars per unit) PI P2 P3 0 MR 외 Q2 Q3 Quantity (units per hour) Which of the following is true? In the above figure, if the market is S=MC a monopoly, output will be Q1 and price will be P3. perfect competition, output will be Q2 and price will be P2. perfect competition, output will be Q3 and price will be P3. a monopoly, output will be Q3 and price will be P3.
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.
Assume that one of the hot dog vendors successfully lobbies the city council to obtain the exclusive right to sell hot dogs within the city limits. This firm buys up all the rest of the hot dog vendors in the city and operates as a monopoly. Assume that this change doesn't affect demand and that the new monopoly's marginal cost curve corresponds exactly to the supply curve on the previous graph. Under this assumption, the following graph shows the demand (D), marginal revenue (MR), and marginal cost (MC) curves for the monopoly firm. Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and quantity of a monopolist. PRICE (Dollars per hot dog) 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0 0 45 Monopoly MC MR 90 135 180 225 270 315 QUANTITY (Hot dogs) D 360 405 450 Monopoly Outcome Deadweight Loss ?
Suppose a monopoly is producing at its profit-maximising (loss-minimizing) quantity, and the price corresponding to this quantity is below average total cost but above average variable cost. The monopoly will shut down in the short run but return to production in the long run shut down in the short run and exit the market in the long run keep producing both in the short run and in the long run keep producing in the short run but exit the market in the long run None of the above.
You are the manager of a monopoly, and your analysts have estimated your demand and cost functions as P = 300-2Q and C(Q) = 1,500 + 2Q2, respectively. a. What price-quantity combination maximizes your firm's profits? Instructions: Round your response to the nearest penny (two decimal places). Price: $ Quantity: units b. Calculate the maximum profits. Instructions: Round your response to the nearest penny (two decimal places). $ c. Is demand elastic, inelastic, or unit elastic at the profit - maximizing price-quantity combination? multiple choice 1 Unit elastic Elastic Inelastic d. What price- quantity combination maximizes revenue? Instructions: Round your response to the nearest penny (two decimal places). Price: $ Quantity: units e. Calculate the maximum revenues. Instructions: Round your response to the nearest penny (two decimal places). $ f. Is demand elastic, inelastic, or unit elastic at the revenue - maximizing price-quantity combination? multiple choice 2 Unit elastic Elastic…
The figure to the right shows the market demand for electricity and the average total cost and marginal cost of producing electricity for a utility company. Suppose the utility company is a regulated natural monopoly. If government regulators want to achieve economic efficiency, then they will regulate a price of $ per kilowatt hour. (Enter a numeric response using a real number rounded to two decimal places) Now suppose instead that government regulators want to eat the lowest price such that the utility company will not suffer a loss so that it will continue to produce in the long run. If so, then i government regulators will set a price of $ per kilowatt hour. Price and cost (dollars per kilowatt hour) 0.52 048 044- 040- 0.36 0324 0.26 0.24 0.20 0.16 0.12 0.06 004 0.00+ ATC MC 4 8 12 16 20 24 28 32 36 40 44 48 Quantity of kilowatt hours (in billions)
. Let the demand curve for a monopolist’s product be P = 100 – 2Qd and the marginal cost of production be constant at MC = 10. Suppose that the firm considers moving from a uniform pricing strategy to a two-block tariff where the first block provides 15 units at a price of P1 = $70 and the second block provides an additional 15 units at a price of P2 = $40. How much does the monopolist’s profit rise with this scheme?