Suppose a monopoly sells its goods in two different markets with demand curves Q1 = 150 – P1 and Q2= 1502 respectively, where Q; is the quantity demanded in each market and P; is theprice per unit in each market, where i = 1,2.If the monopolist has the cost function C = 6+6(Q2 + Q ) with a constant marginal cost in the long-run and can maintain complete separation between the two markets in terms of pricediscrimination, what unit price should be charged in each market to maximise profits?P1 =P2 =

The long-run is a period in which the inputs remain variable except labor. It means the inputs…

Suppose a monopoly sells its goods in two different markets with demand curves Q1 = 150 – PĮ and Q2 = 150 – 2 respectively, where Q, is the quantity demanded in each market and P, is the price per unit in each market, where i = 1,2. If the monopolist has the cost function C = 6+6(Q2 + Q1) with a constant marginal cost in the long-run and can maintain complete separation between the two markets in terms of price discrimination, what unit price should be charged in each market to maximise profits? P = P2 = |

Suppose a monopoly sells its goods in two different markets with demand curves Q1 = 150 – PĮ and Q2 = 150 – 2 respectively, where Q, is the quantity demanded in each market and P, is the price per unit in each market, where i = 1,2. If the monopolist has the cost function C = 6+6(Q2 + Q1) with a constant marginal cost in the long-run and can maintain complete separation between the two markets in terms of price discrimination, what unit price should be charged in each market to maximise profits? P = P2 = |

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

Consider the case of a monopolist who charges the same price to all consumers. The demand for the good is given by Q=813-7p, where Q denotes the quantity demanded at price p. The firm's total cost of producing Q units is given by the function C(Q) = 7 Q What is the efficiency loss in the monopoly equilibrium? (As usual, you must enter a number below, not a ratio, not an expression with symbols..., just a number.)
Suppose the monopolist with a marginal cost of 2 is facing two of customers i = {L, H} with the following demand functions: Customer H: qH Customer L: qL = = 6- PH 4- PL The consumer's total payment T;(q) is T;(q) = A; + piq with lump sum payment A and per unit price p. = a. Assume that the monopolist can distinguish between the two groups of consumers. Further, suppose that A₁ 0, meaning the monopolist is charging uniform prices. Find the profit maximizing price the monopolist charges customer H and the price the monopolist charges customer L. b. Assume that the monopolist can perfectly distinguish between the two groups of consumers and can utilize a lump sum payment A¡ > 0. Find the two part tariff the monopolist charges customer H and the two part tariff charged to customer L.
A monopolist produces a unique product in three different plants, each with its own marginal cost structure. The overall market demand for the product is governed by the demand function = 128 - 8* P,where is the total quantity demanded, and Pis the market price. To meet this demand, the monopolist must decide on the allocation of production quantities Q1, Q2 and Q3 across Plant 1, Plant 2, and Plant 3 respectively. The marginal costs (MC) for producing the good in each plant are as follows: MC₁ = 1, MC₂ = 1 + 2 and MC3Q3. How many units should the monopolist optimally produce in Plant 1 to contribute to the total market demand 62 units O unit 63 units
A monopolist faces two separate markets and can price discriminate accordingly. The demand in the first market is Q1 = 345p, and the inverse demand in the second market is P = 439 – 4Q2. The total cost of production is c(Q) = 1.5(Q1 + Q2). Answer the following: If rounding is needed, write your answers to 3 decimal places. a) - Find the profit maximising price for the first market. b)i Find the profit maximising price for the second market.
The inverse demand of a monopolist is given by the expression P = 50 - 2Q and its cost function is C(Q) = Q^2 + 20Q + 20. a) Determine the profit maximising level of production, price and profits. Plot the profit maximising equilibrium b) Calculate the monopoly power of the company using the Lerner Index and the price elasticity of demand at the profit maximising equilibrium. c) What would be the increase in social welfare if the monopolist is forced to sell its product at perfect competition equilibrium price?
Hand written solutions are strictly prohibited
Suppose a monopolist faces two types of consumers: one with demand curve Q1 = 500 – 2P, and the other with demand curve Q2 = 1500 – 3P. Suppose the firm monopolist knows these demand curves but cannot tell the difference between an individual consumer of type 1 versus type 2. They can charge only one price to the aggregate market demand (horizontal sum across quantities of the two buyer types). Construct the market demand curve (it may have a kink), and calculate the monopolist’s optimal quantity and price. Illustrate this on a graph. Do they serve both markets or do they price out the low demand type? Illustrate the monopolist’s optimal second-degree price discrimination strategy on a graph, and calculate the price-quantity bundles offered to the market under this strategy. Assume the monopolist’s marginal costs are constant and equal to 100. Suppose the monopolist can segment the market between the two types directly and engage in price discrimination. What are the monopolist’s…
A profit maximizing monopolist has a cost function C (q) = 2g, where q > 0 denotes the amount produced, and faces the aggregate demand curve q = 100/p² where p > 0 denotes the price per unit in the market. Assume that the monopolist chooses an optimal price in the range [1, 6]. The optimal price the monopolist would set up is while the Lerner index is Blank # 1 Blank # 2
A monopolist is deciding how to allocate output between two geographically separated markets (Market 1 and 2). Demand and marginal revenue for the two markets are:P1 =15-Q1 P2=25-2Q2 The monopolist's total cost is C=5+3(Q1 + Q2) 2.1 Determine the monopolist profit-maximizing price and output in each region. 2.2 What is the total profit that the monopolist will realize for the two regions?
A monopolist faces a market demand curve given by: Q = 80 - pa) Assume that the monopolist has a cost structure where total costs are described by: C(Q) = 0.25Q2 - 5Q + 1000.What price-quantity combination will a profit maximising monopolist choose? What will profits be? b) What output level would be socially optimal? What is the price at this output level, if all units are sold at the same price? What is the profit? What would the social welfare gain be from this output level compared to the outcome in (a)?c) If government regulation forces the firm to set its price equal to its average cost of production, what will the output level be? What is the price at this output level, if all units are sold at the same price? What is the profit? What would the social welfare gain or loss be from this output level compared to the outcomes in (a) and (b)?
For a monopolist with marginal cost of c, where c > 0, facing a market demand of X(p) = a −bp, derive general formulas that determine the monopolist’s pricing decisions under the block pricing and two-part tariff price strategies. What is the general formula for profits under each pricing strategy?
A monopolist's inverse demand function is estimated as P=100-2Q. The company produces output at two facilities; the marginal cost of producing at facility 1 is MC₁(Q)=4Q₁, and the marginal cost of producing at facility 2 is MC₂(0₂)=202. a. Provide the equation for the monopolist's marginal revenue function. (Hint: Recall that Q+Q₂ = Q.) MR(Q)=-91-9₂ b. Determine the profit-maximizing level of output for each facility. Instructions: Round your response to two decimal places. Output for facility 1:[ Output for facility 2:[ c. Determine the profit-maximizing price. Instructions: Round your response to the nearest penny (two decimal places).