Answered: To maximize total surplus with a…

Business

Economics

To maximize total surplus with a monopoly firm, a benevolent social planner would choose the level of output where

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

The supply curve for a monopolist is always positively sloped.
For the monopoly represented by the figure to the right, at what quantity is its revenue maximized? (Hint: Revenue is maximize where MR = 0.) Why is revenue maximized at a larger quantity than profit? Show the revenue curve. In the figure to the right, let D be demand and MR be marginal revenue. The quantity at which revenue is maximized is Q = 10 units. (Enter your response rounded to the nearest whole number.) Revenue is maximized at a larger quantity than profit because A. costs are decreasing in output. OB. marginal costs can be negative. C. marginal revenue is decreasing in output. OD. D. revenue is greater than profit. OE. profit is decreasing in output. Using the three-point curved line drawing tool, graph the monopoly's revenue curve. Label this curve 'R.' Carefully follow the instructions above, and only draw the required objects. p. $ per unit 30 28- 26- 24- 22- 20- 18- 16- 14- 12- 10- 8- 6- 4- 2- 0- 024 100- 90- 80- 70- 60- 50- 40- 30- 20- 10- 0- 6 MR D 8 10 12 14 16 18 20…
Consider a monopoly that faces the demand curve P = 20 − Q, and has the marginal cost curve MC = 2. a) Use the demand curve to find the equation of the marginal revenue curve. b) Find the profit-maximizing price and quantity for this monopoly if the monopoly uses uniform pricing. What is the producer surplus? c) Now, suppose the monopoly wants to increase profits using block pricing. The total cost the monopoly incurs is T C = 2Q. Find the optimal quantities, Q1 and Q2, and their corresponding optimal prices, P1 and P2 that maximize profits using a two-block pricing scheme. What is the new producer surplus? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
Suppose a monopoly firm with a constant marginal cost 10 faces an inverse linear demand function p= 50 - Q. What would be the profit-maximizing price and quantity if its marginal cost doubles?
Assume that a monopolist faces a demand curve for its product given by: p=130−3q Further assume that the firm's cost function is: TC=490+10q What is the profit for the firm at the optimal quantity and price?
Suppose Bang Bang is the only local swimming pool. She believes that there are 10 potential customers. Each of them has an identical demand function of QI = 250 – 0.02P, with QI as the unit of services of each customer. She operates with a constant variable cost of $500 per unit of service. If Bang Bang is a single price monopoly, calculate the price she should charge for her service. Show your calculations.
Suppose that a monopolist has a patent for widgets and the demand curve is given by Q(P) = 12 – 0.02P. The monopolist’s total costs are TC(Q) = 25Q^2 + 500. You may assume that widgets are continuously divisible, like corn oil or sand. a: Find the quantity Q* that maximizes the monopolist’s profit by exploiting the marginalcondition, necessary for profit maximization at an interior solution. Neatly show your work.b: Find the price P* that the monopolist charges. Neatly show your work.c: Neatly graph the marginal revenue and marginal cost curves, with Q on the horizontal axis.d: Label relevant areas on your graph using a, b, c, etc. and fill in the following chart.
Provide an example of a cost function for which a natural monopoly exists. Why might we want to allow natural monopolies to exist (e.g. how might social welfare benefit from such a monopoly)?
Consider the case of a monopolist who has the ability to perfectly price discriminate by charging each one of its customers a two-part tariff. Suppose for simplicity that there are only two consumers, Mary and Terry. Mary demand for the good is 2/3 of the aggregate demand. The aggregate demand is given by Q=550-3p, where Q denotes the total quantity demanded at price p. The firm's total cost of producing Q units is given by the function C(Q) = 5 Q + 100 Find the two-part tariff that the firm will charge Mary in order to maximize its profit. Then enter the fee of this two-part tariff below. (As usual, you must enter a number below, not a ratio, not an expression with symbols..., just a number.)
The monthly demand function for x units of a product sold by a monopoly is p = 6,100 - Find the revenue function, R(x), in dollars. R(x) = Find the cost function, C(x), in dollars. C(x) = Find the profit function, P(x), in dollars. P(x) = Find P'(x). P'(X) = Find the number of units that maximizes profits. (Round your answer to the nearest whole number.) units Find the maximum profit. (Round your answer to the nearest cent.) $ dollars, and its average cost is C = 3,040 + 2x dollars. Production is limited to 100 units. Does the maximum profit result in a profit or loss? O profit O loss
Suppose the demand curve for a monopoly firm’s product is given by P = 120 – 2Q. Marginal cost of production is given by MC = 8Q. Find the profit maximizing output.
Consider a market for cars with just one firm. The firm has a linear cost functionC(q) = 2q. The market inverse demand function is P(Q) = 9 − Q, where Q is thetotal quantity produced. Since initially there is just one firm, q = Q.(a) Set up the maximisation problem for the monopolist and determine the optimalprice and quantity of cars produced. How much profit does the firm make?