Suppose a nonlinear price discriminating monopoly can set three prices, depending on the quantity a consumer purchases. The firm's profit is x=P: (Q1) + P2 (Q2 -Q;) + P3 (Q3 - Q2) - mQg, where p, is the high price charged on the first Q, units (first block), p, is a lower price charged on the next Q, -Q, units, p3 is the lowest price charged on the Q, - Q, remaining units, Q, is the total number of units actually purchased, and m = $30 is the firm's constant marginal and average cost. Use calculus to determine the profit-maximizing p1, P2, and p3. Let demand be p= 90 - Q. The profit-maximizing prices for the nonlinear price discriminating monopoly are P1 = S P2 = S and P3 = S (Enter numeric responses using real numbers rounded to two decimal places.)

Suppose a nonlinear price discriminating monopoly can set three prices, depending on the quantity a consumer purchases. The firm's profit is x=P: (Q1) + P2 (Q2 -Q;) + P3 (Q3 - Q2) - mQg, where p, is the high price charged on the first Q, units (first block), p, is a lower price charged on the next Q, -Q, units, p3 is the lowest price charged on the Q, - Q, remaining units, Q, is the total number of units actually purchased, and m = $30 is the firm's constant marginal and average cost. Use calculus to determine the profit-maximizing p1, P2, and p3. Let demand be p= 90 - Q. The profit-maximizing prices for the nonlinear price discriminating monopoly are P1 = S P2 = S and P3 = S (Enter numeric responses using real numbers rounded to two decimal places.)

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

This is part 3 of a three-parts question. A uniform-pricing monopoly faces the inverse demand function P = 50 - 4Q and has costs given by TC = 100 + 20Q + 3Q². Fill in the blank. The Lerner Index for this market is (Round to at least 2 decimal places.)
Problem 2.3. Monopoly with increasing marginal cost (15 points) A firm with cost function 2 CQ Q () 0.50 = is a monopoly in a market where the inverse demand function is pQ Q ( ) 120 2 = - . (a) Find the monopolist's marginal revenue and marginal cost. (b) Find the monopolist's profit- maximizing quantity and price Update: C(q)=.5q^2 and P(q)=120-2q
Consider the relationship between monopoly pricing and the price elasticity of demand.
Suppose the demand facing the monopolistic firm is given by P(y) = 1 − p. • Calculate the demand elasticity of price at y = 0.5 and y = 1. • Suppose that the total cost function is T C(y) = cy where c is a positive constant.Show formally that the monopolist will chose a point on the elastic portion of the demand.
A monopolistic producer of two goods has a total cost function TC = 5Q1+10Q2 and a total revenue TR = 50Q1- Q12 – 2Q2Q1+100Q2– 4Q2² i) Calculate the values of Q1 and Q2 will yield a maximum profit ii) Using the Hessian, prove that the firm's profit is at a maximum.
• Consider demand p (Q) = 180 - 20, constant MC = 60. Draw the graph of monopoly two-block pricing and solve the optimal prices and quantities (p1, 21) and (p2, 22).
DEWA is the sole supplier of electricity in Dubai. The demand for electricity is denoted by equation P = 2888 Q, and the total cost (TC) is given as TC = 400 + 40°. Find profit maximizing price and quantity as monopoly?
Assume a monopoly firm is considering the production of two brands, 1 and 2. Marginal cost is constant at 20 for both products -- assume no fixed costs. The inverse demand for brand i is pi=140−qi−dqj , where i≠j and d is a constant. Part A) Find the firm's QUANTITIES
The demand and total cost functions for a monopoly firm are: Q(P) = 39.5 – 0.5P TC(Q) = 60 – Q + 0.5 Q2 1. What is the firm’s profit πM? Indicate this on the graph. 2. What are the firm's fixed and variable costs? 3. What would be the socially optimal Q* and P* (round to 1 decimal place if needed)
I am a little confused on the explnation for Part B. I would say no they should shut down their operation.
A monopoly produces widgets at a marginal cost of $10 per unit and zero fixed costs. It faces an inverse demand function given by P = 50 - Q. The demand elasticity of a widget at the monopoly price and quantity is: Multiple Choice -1.5. -2.5. 2
Topside Tiles, which produces roofing tiles, is a local monopoly. Its inverse demand function is p=140-2Q, and its constant marginal cost is 10. The owner has delegated the decision of how much output to produce to the plant manager. The manager's income, Y, is 5% of revenue: Y=0.05R. Show that a manager who wishes to maximize income, Y, will choose an output that exceeds the profit-maximizing level. Is there a conflict of interest between the owner and manager? Is this situation an agency problem? (Hint: This problem can be solved using a graph, by using calculus, or by using the rule that the MR curve has twice the slope of the demand curve.) The output that maximizes profit is (Enter your response rounded to one decimal place.) units.