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1. What is the profit maximizing principle for a monopolist?
a. Price=Marginal Cost
b. Marginal Revenue=Marginal Cost
c. Marginal Revenue<="" abel="" style="font-family: "Open Sans", sans-serif; text-shadow: none !important; letter-spacing: normal !important;">
d. None of the above
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- 1. Using a graph, show a situation in which a monopolist is incurring short-run losses. Explain how this is possible. 2. Julee has estimated the demand and marginal revenue for her product. They are P = 100 - 2Q (quantity) and MR = 100 - 4Q, respectively. She also experiences constant marginal cost of $16. a. Does Julee have any market power? How can you tell? b. What is Julee’s profit-maximizing quantity? c. What price should Julee charge at that profit-maximizing quantity? 3. Explain a situation in which, when holding costs constant, a monopolist that was earning economic profits in the past can later incur an economic loss.4. A monopolist is faced with the following cost and revenue curves: $ 80 70 60 50 40 30 20 10 0 -10 0 -20 100 200 300 400 FMC 500 AC AR 600 MR Quantity (a) What is the maximum-profit output?. (b) What is the maximum-profit price? (c) What is the total revenue at this price and output? (d) What is the total cost at this price and output? (e) What is the level of profit at this price and output? (f) If the monopolist were ordered to produce 300 units, what would be the market price? (g) How much profit would now be made? (h) If the monopolist were faced with the same demand, but average costs were constant $60 per unit, what output would maximise profit? (i) What would be the price now? (j) How much profit would now be made? (k) Assume now that the monopolist decides not to maximise profits, but instead sets a price of $40. How much will now be sold?.1. Explain how a monopolist chooses the quantity of output to produce and the price to change. 2. Why is a monopolist's marginal revenue less than the price of its good? Can marginal revenue ever be negative? Explain. 3. Describe the ways policymakers can respond to the inefficiencies caused by monopolies. List a potential problem with each of these policy responses.
- GRADUATE STUDIES Practice Question 1 The table below shows the demand for a product produced by a monopolist, who has a constant marginal cost and an average total cost of GH¢45.00 per Quantity (thousand's of units) Price (cedis per unit) 0 120 1 105 2 90 3 75 4 60 5 45 6 30 UPSA 25 GRADUATE STUDIES a. Calculate the total revenue and marginal revenue for each level of quantity. b. What are the profit-maximizing level of output and the price of the product? c. Calculate the Lerner Index for the industry.2. The demand schedule for the product produced by a monopolist is given in the table below. Complete the table by computing total revenue and marginal revenue. Quantity Total Marginal demanded Price (a) What do the data in the table indicate about revenue revenue the relationship between total revenue and 1 $325 $. marginal revenue? Explain. 300 275 4 250 225 6. 200 7 175 8 150 6. 125 (b) What do the data in the table indicate about 10 100 the elasticity of demand? 11 75 12 50 13 25 14 | | | | | | | |I | | %24 3.2. A monopoly sells its good in Country A, where the elasticity of demand (in absolute value) is 2, and in Country B, where the elasticity of demand (in absolute value) is 3. Its marginal cost is $20. Determine what price does the monopoly sells its good in each country if the monopolist is able to price discriminate. How and why does the price depend on the elasticity of demand?
- 2. The following table provides the demand facing a monopolist for a unique product. Qty of Price $20 S18 $16 $14 $12 4 $10 $8 S6 a.) Calculate Total Revenue (TR) and Marginal Revenue (MR). Why is MR less than price? b.) Suppose there is no fixed cost and the marginal cost (MC) of production and Average total cost (ATC) is constant at $6 per pound. What is the quantity and price chosen by the monopolist? What is the profit earned by the monopolist?3. The graph below shows a firm's demand, marginal revenue, and marginal cost curves. Find the profit-maximizing level of output and mark it q*. Find the price the firm should charge and mark it P*. P MC X D MR Quantity 4. The Whatsa Widget Company has a monopoly over the sale of widgets in a small midwestern town. The firm's demand, marginal revenue, marginal cost, and average cost curves are shown below. Find the firm's profit-maximizing level of output and the price the firm will charge. Is the firm earning a positive or a negative profit? Show the firm's profit (or loss) on the graph. P MC X MR D ATCSuppose there are 5 types of consumers: Type A. Type B. Type C. Type D, and Type E. There are 3,000 of each type. Two software products are sold by a monopolist: spreadsheets and word processing. Assume the marginal cost of production is $0. Consumer Type A B C D E Number 3,000 3.000 3,000 3.000 3,000 Spreadsheet 800 300 200 100 0 b. What is profit at this pricing policy? $ Willingness to Pay Word Processor Instructions: Round your answers to the nearest whole number. a. What will be the profit-maximizing bundle price? $ 0 100 200 300 800 Both 800 400 400 400 800 c. How will profit from this pricing policy compare to profit under independent pricing of the two goods? When pricing independently, the profit-maximizing price for spreadsheets is $ processing is $ d. What is profit under independent pricing? $ and the profit-maximizing price for word
- Determine the profit maximization point of a firm in a graph showing the dynamics of the Production and Cost Function. Supoose you are given this data of a monopolist. The price of the product is 35 pesos. 1. Compute for the- total cost, Average variable cost, marginal cost, total revenue, marginal revenue.2. Graph the schedule and answer the following question. - did the firm able to maximize its profit? If yes identify at what level (Quantity/output) or highlight the profit maximization point in the graph. If no, cite the reason why the firm was not able to maximize profit. Elaborate you explanation through you analysis on the Dynamics of the cost and output.Please refer to th graph attached. The graph shows the Demand, Marginal Revenue, Average Total Cost, Average variable Costs and Marginal Cost curves for a monopolist. (a) What is the profit maximizing/ loss minimizing quantity of output and what is the maximum price the monopolist can charge? (b) Is this monopolist making economic profit or economic loss? How do you know? Explain please. (c) Calculate the firms profit or loss and show the economic profit/loss on the graph.16) The table above shows the demand and total cost schedule for a monopolist hotel. To the nearest whole dollar, what is this monopolist hotel's monthly profit? Rooms Price Total rented (dollars cost monthly (dollars) per room) 201 100 1 191 200 181 290 171 370 4 161 440 151 520 141 610 7 131 710 121 820 9. 111 940 10 101 1090 11 91 1290 2. 3. 6 8.