• , The following figure shows the demand curve and the marginal revenue (MR) curve of a monopolist supplying petroleum. Price/Cost (S) Demand MR 10 15 20 25 40 60 65 70 75 80 85 90 Quantity (100 gallons) a) If the monopolist faces a constant marginal cost of $3, what is the optimal output that it should produce? b) If the monopolist faces a constant marginal cost of $3, at what price should it sell the optimal output? c) If the average total cost of the monopolist is $4 per liter when it produces the optimal output, determine his profit or loss.

• , The following figure shows the demand curve and the marginal revenue (MR) curve of a monopolist supplying petroleum. Price/Cost (S) Demand MR 10 15 20 25 40 60 65 70 75 80 85 90 Quantity (100 gallons) a) If the monopolist faces a constant marginal cost of $3, what is the optimal output that it should produce? b) If the monopolist faces a constant marginal cost of $3, at what price should it sell the optimal output? c) If the average total cost of the monopolist is $4 per liter when it produces the optimal output, determine his profit or loss.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The following graph gives the demand (D) curve for water services in the fictional town of Streamship Springs. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local water company, a natural monopolist. On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist. PRICE (Dollars per hundred cubic feet) 40 36 32 28 24 20 0 0 1 2 3 5 6 7 8 QUANTITY (Hundreds of cubic feet) MR 4 True ATC MC O False 9 10 D The water company is experiencing economies of scale. Which of the following statements are true about this natural monopoly? Check all that apply. + Monopoly Outcome The water company must own a scarce resource. It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers. In order for a monopoly to exist in this case, the government must have intervened and created it.…
The following table gives total revenue and cost for a monopolist: Quantity Price Total Revenue Total Cost 100 1 185 150 130 180 290 170 175 415 222 4 170 520 287 165 600 367 160 655 467 155 685 587 150 685 737 If the market were competitive how much lower would the price of the good be? lower What is the producer surplus of the monopolist? %24
14) The demand equation for a monopolist's product is p=200 -0.98q, where p is the price per unit (in dollars) of producing q units. If the total cost c (in dollars) of producing 8 units is given by c= 0.02q2 + 2q + 8000, find the level of production at which profit is maximized.
A monopolist faces a demand curve P = 100 – 4Q and initially faces total costTC = 12Q. (a) Calculate the profit-maximizing monopoly quantity and price, and compute the monopolist's total revenue and profits at the optimal price. (b) Suppose that the monopolist's total increases to TC = 44Q. Verify that the monopolist's total revenue goes down. c) Suppose that all firms in a perfectly competitive equilibrium had a combined total cost T C = 12Q. Find the long-run perfectly competitive industry price and quantity. Also what are the combined industry profits and revenue. (Hint: the supply curve is just the marginal cost) (d) Suppose that all firms' total costs increased to T C = 44Q. Verify that the increase in marginal cost causes total industry revenue to go up.
7. A monopolist faces inverse demand p(Q) = 22 - 2Q and has total cost function TC(Q) = 2Q. a. Calculate the equilibrium price, quantity, consumer surplus, and producer surplus if the monopolist must charge all consumers the same price. b. Suppose instead that the monopolist can perfectly price discriminate among consumers. What are the price, quantity, consumer surplus, and producer surplus now? c. Alternatively, the monopolist decides to charge a two-part tariff. What lump sum fee and price per unit should the monopolist charge if consumers are homogeneous?
4) A monopolist faces a market inverse demand function: P = 250 – 5Q and marginal cost function: ATC = MC = 10. Answer the following. If the monopolist employs a single price strategy, what is the optimal quantity produced and price charged. What is the market up and contribution margin from the strategy in part a if Ed = -1.0833. If other firms trying to enter this market had slightly higher cost structures, what would be a good price & quantity mix to limit entry of competition and why (no math needed). If the monopolist could create a bundled good instead of the strategy in part a, what price would it charge and how many units would be sold in the bundle. What are the profits from part a & part d? Which pricing strategy is preferred. EC: Briefly explain why a firm that offers a buy 2 get the 3rd free deal, does not just offer that same product at a 33.33% discount of the normal stated price. Need help with number 2.
Please refer to the figure provided. Imagine that this market could be perfectly competitive, controlled by a monopolist who charges a single price or a monopolist who charges each customer a different price 1. How much is producer surplus if the market is controlled by a single-price monopolist? $ 2. Suppose now the monopolist is able to charge all customers the maximum price they are willing to pay, how much is the producer surplus?
Question 4.3 (a) A monopolist faces the demand curve: Q = 1000 – 20P. What is the exact value of the price elasticity of demand when the price $20 and $30 respectively (hint: refer to each of the stated price level only)? At the two stated price level, how should the monopolists change the output level to maximize profit?
© Macmillan Learning Monopoly: End of Chapter Problem 11. Sandy owns the only landscaping company in town that specializes in flower gardens-thus, Sandy is a monopolist. At a quantity of 10 flower gardens, the marginal cost of producing one more flower garden is $300, and the marginal revenue from selling one more flower garden is $250. To maximize profits, Sandy should decrease output to the point where MR = MC and increase price based on the demand curve. decrease output to the point where MR > MC and increase price based on the demand curve. decrease output to the point where MR = MC. The market price won't change because monopolists are price takers. O increase output to the point where MR = MC and decrease price based on the demand curve.
2. A monopolist faces a representative consumer who acts as a price taker and has the demand function as Q(Q) = 200 – 2P. Suppose the monopolist bears the total cost C(Q) = 100 + 20Q + when producing Q units. a. Find the producer surplus of the monopoly if it exercises perfectly price discrimination. b. Find the producer surplus of the monopoly under the optimal two-block pricing. c. If the monopoly sells with two-part tariff T = A + pQ to the consumer, find its optimal A and p.
Give typing answer with explanation and conclusion A monopolist has a demand curve given by P = 88 − Q and a total cost curve given by TC = 34 + Q2. The associated marginal cost curve is MC = 2Q. Suppose the monopolist also has access to a foreign market in which he can sell whatever quantity he chooses at a constant price of 60. How much will he sell in the foreign market? What will his new quantity and price be in the original market?
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