The inverse demand for milk is, PD = 96 - 1.4Q.Now suppose that the market in the previous questionwas run by a cartel. The cartel restricts quantity inorder to maximize industry profits. In other words, itacts like a monopolist.The marginal cost of milk is, MC(Q) = 22 +0Q.What is the profit-maximizing quantity of milk?

The monopoly market is characterized by presence of single firm in the market. Firm is price maker.…

The inverse demand for milk is, PD = 96 - 1.4 Now suppose that the market in the previous que was run by a cartel. The cartel restricts quantity order to maximize industry profits. In other word acts like a monopolist. The marginal cost of milk is, MC(Q) = 22 +0Q. IL

The inverse demand for milk is, PD = 96 - 1.4 Now suppose that the market in the previous que was run by a cartel. The cartel restricts quantity order to maximize industry profits. In other word acts like a monopolist. The marginal cost of milk is, MC(Q) = 22 +0Q. IL

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

Assume a single-price monopolist has an inverse market demand curve given by P(Q)=300-0.5Q, and has a cost curve: C(Q)=125+20Q+0.5Q2. We already know that Monopolist will provide 140 units, Economic profit is 19475, and Economic Rent is 190. If the impact of a 35% ad valorem tax imposed on the consumers in the market. Then: Q1: What is the equilibrium quantity will be sold in the after-tax equilibrium? Q2: What are the economic rents of the monopolist?
A company operates two plants which manufacture the same item and whose total cost functions are C₁ = 5.5 +0.01(9₁)² and C₂ M 8.2 +0.08(92)². where q, and q2 are the quantities produced by each plant. The company is a monopoly. The total quantity demanded, q = 91 +92. is related to the price, p, by p= 40 -0.08q. How much should each plant produce in order to maximize the company's profit?¹ 91 = 92 = i MA
A monopolist faces the following market demand function: D(P) = 100 – P and has total costs equal to TC(Q) = 100 + 100 Show that the monopolist's cost function is subadditive for all relevant levels of demand (for all Q< 100). (Hint: Let EN Qi = Q be a way to split up the total production of quantity Q in N different firms. You can then use the fact that the minimum of EN Q? is reached at Qi = 8.)
BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Suppose that BYOB cannot price discriminate; that is, it sells its beer at the same price per can to all customers. The following graph shows the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) for beer in this market. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for BYOB. IF BYOB is making a profit, use the green rectangle (triangie symbols) to shade in the area representing its profit. On the other hand, if BYOB is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. 4.00 3.50 Monopoly Outoome 3.00 ATC 2.50 Profit 2.00 1.50 Los MC 1.00 0.50 MR 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 QUANTITY (Thousands of cans of beer) PRICE (Dollars per can)
The supply chain for Pappy Van Winkle bourbon is characterized by a monopolist upstream producer and a competitive downstream retail sector. Final consumers’ demand for Pappy Van Winkle bourbon is given as: P=140-2Q, where Q is the number of bottles that are purchased each day. The marginal cost of production (i.e., performing the manufacturing function) can be written as: MCM=30+2Q, and the marginal cost of performing the retail function is MCA=20. Suppose that the two firms are not vertically integrated. Construct the final consumers’ demand curve.
Use the following to answer questions (1)-(6): Suppose a monopolist sells a product to consumers for which a particular consumer's choice is whether to buy 1 unit of the product or not to buy the product. In the absence of price discrimination, the market demand for the monopolist's product is: Q-150-%P. Further, the firm's short-run total cost is: TC-1000 + 100Q. Now, knowing each consumer's reservation price, imagine the monopolist wishes to engage in first-degree price discrimination. [1] A particular consumer's reservation price corresponds to the maximum amount they a willing to pay to buy 1 unit of the product. A. B. [2] Wishing to maximize profit from first-degree price discrimination, the monopolist should sell a quantity equal to: A. 50 B. 75 C. 100 D. None of the above [3] Continuing question (2), at the quantity chosen the consumer willing to pay the least for the product has a reservation price exceeding $50. A. B. [4] A. B. C. D. [5] True False A. B. C. D. [6] A. B. True…
A monopoly sells its good in the U.S. and Japanese markets. The American inverse demand function is Pa = 90 - Qa' and the Japanese inverse demand function is P₁ = 80 - 2Qj, where both prices, På and p₁, are measured in dollars. The firm's marginal cost of production is m = $25 in both countries. If the firm can prevent resales, what price will it charge in both markets? (Hint: The monopoly determines its optimal (monopoly) price in each country separately because customers cannot resell the good.) The equilibrium price in Japan is $ (round your answer to the nearest penny) The equilibrium price in the U.S. is $. (round your answer to the nearest penny)
A company operates two plants which manufacture the same item and whose total cost functions are C₁ = 5.8 +0.03(91)² and C₂ = 7.3 + 0.04(92)², where 9₁ and 92 are the quantities produced by each plant. The company is a monopoly. The total quantity demanded, q = 91 +92, is related to the price, p, by P = 400.04q. How much should each plant produce in order to maximize the company's profit?¹ 91 = 92 = i ! !
A monopoly sells its good in the U.S. and Japanese markets. The American inverse demand function is Pa = 120-Q₂. and the Japanese inverse demand function is P₁ = 100-2Q₁ where both prices, p, and p,, are measured in dollars. The firm's marginal cost of production is m = $20 in both countries. If the firm can prevent resales, what price will it charge in both markets? (Hint: The monopoly determines its optimal (monopoly) price in each country separately because customers cannot resell the good.) The equilibrium price in Japan is $. (round your answer to the nearest penny)
Suppose that monopolist faces the following demand curve: P = 80-3Q. Monopolist operates in two plants with the following cost functions: TC, = 2q, + an output in each plant. %3D and: TC, 12qh+q%. Find the optimum %3D 9, = 12 and q, = 13 9 = 4 and 4, = 1 91 = 6 and 92 = 4 Oq = 8 and q2 = 7
3. Suppose a software monopolist faces two markets for its software, students and professionals. The demand curve of professionals is given by Qp = 200-2Pp and the demand curve by students is given by Qs = 150 - 3Ps. The firm's cost function is C(Q) = 400+5Q. (a) If the firm can price discriminate, what price should it charge in each market to maximize profits? How much profit does it earn? (b) If the firm cannot price discriminate, what price should it charge? Verify that it sells to both markets at this price. How much profit does it earn? Hint: If the firm cannot price discriminate, this means it must treat the two markets as a single combined market.
3. Consider a monopolist engine producer and a monopolist car producer. The engine producer has a total cost of 0. Let Pu denote the price chosen by the engine producer. The car producer obtains engines from the engine producer. Each car requires one engine. The car producer has a fixed cost of 0 and a marginal cost of Py. Let PD denote the price chosen by the car producer. The demand for cars is given by QD = 20 - PD. (a) If the two firms are separate, what is the price and quantity of cars sold? (b) If the two firms are separate, what is the sum of the profits for the two firms? (c) If the two firms vertically integrate, what is the price and quantity of cars sold? (d) If the two firms vertically integrate, what is the profit of the resulting firm?