For a monopoly , Profit maximization condition and its price and output level.

Question

2. Suppose the cost function for a monopoly is given by TC =F+c.q where TC is the total cost, F is the fixed cost and q is the output of the firm. The demand function for the monopoly is given by q = A-bP where A > 0 and b > 0. Find out the profit maximizing price, quantity, and profit for the monopoly. Also find out the expression for the marginal revenue of the monopoly as well as the elasticity of demand facing the monopoly.

Answer 1

Question

Chapter 9, Problem 3P

A

To determine

For a monopoly,

Profit maximization condition and its price and output level.

B

To determine

For a monopoly,

Reason behind MR

C

To determine

For a monopoly,

Show deadweight loss

D

To determine

For a monopoly,

If Greeks decide to charge royalty fee per ring from Manufacturer, what would happen to price and output.

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2. Suppose the cost function for a monopoly is given by TC =F+c.q where TC is the total cost, F is the fixed cost and q is the output of the firm. The demand function for the monopoly is given by q = A-bP where A > 0 and b > 0. Find out the profit maximizing price, quantity, and profit for the monopoly. Also find out the expression for the marginal revenue of the monopoly as well as the elasticity of demand facing the monopoly.

Q5. The graph below represents a monopoly firm. Answer the questions below. ( a. Briefly explain three ways in which pricing can be set with a regulated monopoly and the intended objective of each pricing method.b. Based on the diagram, if this monopoly firm is unregulated, what will be its profit? Show your calculations.c. Based on the diagram, if this firm is regulated based on social interest theory, what will be its profit? Show and explain your calculations.d. Based on the diagram, if this monopoly is subject to rate of return regulation, what will be the new price, output and profit of the firm? Show your calculations with explanations.e. Based on the diagram, if this is a natural monopoly that is allowed to set its price, what will be the minimum it should set in order to make a profit or break even? Explain your answer.

6. In the following figure, if the monopoly firm races ATC₁, which rectangle measures total profit? If the monopoly firm faces ATC₂ what is the total profit? What information would you need in order to know whether the monopoly firm will shut down or continue producing in the short run? In the long run?

Answer 2

Question

Chapter 9, Problem 3P

A

To determine

For a monopoly,

Profit maximization condition and its price and output level.

B

To determine

For a monopoly,

Reason behind MR

C

To determine

For a monopoly,

Show deadweight loss

D

To determine

For a monopoly,

If Greeks decide to charge royalty fee per ring from Manufacturer, what would happen to price and output.

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Answer 3

Question

Chapter 9, Problem 3P

A

To determine

For a monopoly,

Profit maximization condition and its price and output level.

B

To determine

For a monopoly,

Reason behind MR

C

To determine

For a monopoly,

Show deadweight loss

D

To determine

For a monopoly,

If Greeks decide to charge royalty fee per ring from Manufacturer, what would happen to price and output.

Expert Solution & Answer

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Answer 4

Question

Chapter 9, Problem 3P

A

To determine

For a monopoly,

Profit maximization condition and its price and output level.

B

To determine

For a monopoly,

Reason behind MR

C

To determine

For a monopoly,

Show deadweight loss

D

To determine

For a monopoly,

If Greeks decide to charge royalty fee per ring from Manufacturer, what would happen to price and output.

Expert Solution & Answer

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Answer 5

Chapter 9, Problem 3P

A

To determine

For a monopoly,

Profit maximization condition and its price and output level.

B

To determine

For a monopoly,

Reason behind MR

C

To determine

For a monopoly,

Show deadweight loss

D

To determine

For a monopoly,

If Greeks decide to charge royalty fee per ring from Manufacturer, what would happen to price and output.

Answer 6

Chapter 9, Problem 3P

A

To determine

For a monopoly,

Profit maximization condition and its price and output level.

Answer 7

Chapter 9, Problem 3P

A

To determine

For a monopoly,

Profit maximization condition and its price and output level.

Answer 8

B

To determine

For a monopoly,

Reason behind MR

Answer 9

B

To determine

For a monopoly,

Reason behind MR

Answer 10

C

To determine

For a monopoly,

Show deadweight loss

Answer 11

C

To determine

For a monopoly,

Show deadweight loss

Answer 12

D

To determine

For a monopoly,

If Greeks decide to charge royalty fee per ring from Manufacturer, what would happen to price and output.

Answer 13

D

To determine

For a monopoly,

If Greeks decide to charge royalty fee per ring from Manufacturer, what would happen to price and output.

Answer 14

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Ch. 9 - Prob. 1P Ch. 9 - Prob. 2P Ch. 9 - Prob. 3P Ch. 9 - Prob. 4P Ch. 9 - Prob. 5P Ch. 9 - Prob. 6P Ch. 9 - Prob. 7P Ch. 9 - Prob. 8P Ch. 9 - Prob. 9P Ch. 9 - Prob. 10P

For a monopoly , Profit maximization condition and its price and output level.

Solution Summary: The author explains a monopoly's profit maximization condition and its price and output level.

For a monopoly,

Profit maximization condition and its price and output level.

For a monopoly,

Reason behind MR

For a monopoly,

Show deadweight loss

For a monopoly,

If Greeks decide to charge royalty fee per ring from Manufacturer, what would happen to price and output.

Chapter 9 Solutions

For a monopoly , Profit maximization condition and its price and output level.

Solution Summary: The author explains a monopoly's profit maximization condition and its price and output level.

For a monopoly, Profit maximization condition and its price and output level.

For a monopoly, Reason behind MR

For a monopoly, Show deadweight loss

For a monopoly, If Greeks decide to charge royalty fee per ring from Manufacturer, what would happen to price and output.

Chapter 9 Solutions

For a monopoly,

Profit maximization condition and its price and output level.

For a monopoly,

Reason behind MR

For a monopoly,

Show deadweight loss

For a monopoly,

If Greeks decide to charge royalty fee per ring from Manufacturer, what would happen to price and output.