You have been granted a monopoly in the avocado market. The market demand for avocados is Q = 2000 – 2P. Your cost %3D structure is such that your total costs are TC = 1000+ 400Q. (limit: whatever needed) What is your profit maximizing price and quantity? Explain this in words and show it graphically.
You have been granted a monopoly in the avocado market. The market demand for avocados is Q = 2000 – 2P. Your cost %3D structure is such that your total costs are TC = 1000+ 400Q. (limit: whatever needed) What is your profit maximizing price and quantity? Explain this in words and show it graphically.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![You have been granted a monopoly in the
avocado market. The market demand for
avocados is Q = 2000 – 2P. Your cost
structure is such that your total costs are TC =
1000+ 400Q. (limit: whatever needed)
What is your profit maximizing price and
quantity? Explain this in words and show it
graphically.
What are the profit, producer surplus and
consumer surplus?
The government is thinking about breaking
your monopoly into ten identical firms and
giving ownership to 10 random people.
Correspondingly, each firm would have a
fixed cost of $1000 and a marginal production
cost of $400 per unit. In this perfectly
competitive environment, what would be the
equilibrium price and quantity? Explain this in
words and show it graphically.
What are the profit per firm, producer surplus
and consumer surplus that correspond to your
answer to part d)?
How much would you be willing to pay to
keep the government from taking your
monopoly away? Explain.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F3a18361e-396d-4c9a-b3f1-5e07abf44dc7%2F94c18181-71bc-41ac-960e-9862b071ef93%2Fm2hshn_processed.jpeg&w=3840&q=75)
Transcribed Image Text:You have been granted a monopoly in the
avocado market. The market demand for
avocados is Q = 2000 – 2P. Your cost
structure is such that your total costs are TC =
1000+ 400Q. (limit: whatever needed)
What is your profit maximizing price and
quantity? Explain this in words and show it
graphically.
What are the profit, producer surplus and
consumer surplus?
The government is thinking about breaking
your monopoly into ten identical firms and
giving ownership to 10 random people.
Correspondingly, each firm would have a
fixed cost of $1000 and a marginal production
cost of $400 per unit. In this perfectly
competitive environment, what would be the
equilibrium price and quantity? Explain this in
words and show it graphically.
What are the profit per firm, producer surplus
and consumer surplus that correspond to your
answer to part d)?
How much would you be willing to pay to
keep the government from taking your
monopoly away? Explain.
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 3 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Recommended textbooks for you
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![ENGR.ECONOMIC ANALYSIS](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9780190931919/9780190931919_smallCoverImage.gif)
![Principles of Economics (12th Edition)](https://www.bartleby.com/isbn_cover_images/9780134078779/9780134078779_smallCoverImage.gif)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
![Engineering Economy (17th Edition)](https://www.bartleby.com/isbn_cover_images/9780134870069/9780134870069_smallCoverImage.gif)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
![Principles of Economics (MindTap Course List)](https://www.bartleby.com/isbn_cover_images/9781305585126/9781305585126_smallCoverImage.gif)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
![Managerial Economics: A Problem Solving Approach](https://www.bartleby.com/isbn_cover_images/9781337106665/9781337106665_smallCoverImage.gif)
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
![Managerial Economics & Business Strategy (Mcgraw-…](https://www.bartleby.com/isbn_cover_images/9781259290619/9781259290619_smallCoverImage.gif)
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education