19. Firm A is monopolist in x market, and it consumes one unit of y in order to produce one unit ofx. It costs 5 + py TL to produce one unit of x. (py is the price of product y.) y is produced by amonopolist, B, and it costs 5 TL to produce one unitf of y. The demand for x is defined bypx = 50-qx (px product price, qx quantity demanded).a) Assume that px is set by Firm A and py is set by Firm B. What would be the equilibrium pricesfor products x and y? Calculate Firm A and B's profits.b) Assume that Firms A and B merge together. What would be the equilibrium prices for productsx and y? Calculate the profits of the new firm.c) Would the merger between A and B increase the consumer surplus? Why (not)?

A monopolist in economics refers to a single seller or producer who dominates a particular market.…

19. Firm A is monopolist in x market, and it consumes one unit of y in order to produce one unit of x. It costs 5 + py TL to produce one unit of x. (py is the price of product y.) y is produced by a monopolist, B, and it costs 5 TL to produce one unitf of y. The demand for x is defined by Px = 50-qx (px product price, qx quantity demanded). a) Assume that px is set by Firm A and p, is set by Firm B. What would be the equilibrium prices for products x and y? Calculate Firm A and B's profits. ) Assume that Firms A and B merge together. What would be the equilibrium prices for products x and y? Calculate the profits of the new firm. c) Would the merger between A and B increase the consumer surplus? Why (not)?

19. Firm A is monopolist in x market, and it consumes one unit of y in order to produce one unit of x. It costs 5 + py TL to produce one unit of x. (py is the price of product y.) y is produced by a monopolist, B, and it costs 5 TL to produce one unitf of y. The demand for x is defined by Px = 50-qx (px product price, qx quantity demanded). a) Assume that px is set by Firm A and p, is set by Firm B. What would be the equilibrium prices for products x and y? Calculate Firm A and B's profits. ) Assume that Firms A and B merge together. What would be the equilibrium prices for products x and y? Calculate the profits of the new firm. c) Would the merger between A and B increase the consumer surplus? Why (not)?

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter9: Monopoly

Section: Chapter Questions

Problem 7SQP

See similar textbooks

Similar questions

3. Consider a monopolist who faces the following demand: Demand: P= 100 – 10Q MC= 50+20 a) Find the price quantity combination that maximizes profit for the monopolist. b) Is the firm making positive, negative or zero profits? (100,100) Kareem chooses (60, 105) (500, 400) Saleem chooses Kareem chooses (50,420) 4. Calculate the SPNE/SPNES for the game stated above.
$30 MC ATC $20 $10 MR Demand 10 20 30 40 Quantity (in Thousands per Month) What is the maximum profit per month that the monopolist will be able to earn according to the graph? zero approximately $20,000 approximately $50,000 Oapproximately $100,000 Price
Question 4 Think a price making firm (monopolist) with a downward-sloping demand curve is one with a price elasticity of demand equal to-1. This is illustrated in the following diagram. P=AR 20 Expenditure stays the same as price changes TR AR = = Q d (TR) dQ Slope = b/Q 40 100 Diagram 5 Unit elastic demand (Pe=-1) MR = As price and quantity change by the same proportion, total revenue is the same at each price (the TR curve is horizontal). This gives the following TR, AR and MR equations: TR=b b -D (AR) Q = 0 Q As TR is constant at all outputs, so MR must equal zero. In diagram 5, what is the value of b in equation TR=b?
The diagram shows the equilibrium of a profit-maximising monopolist. Cost/revenue (£) Which area represents the supernormal profits made by the monopolist? OABQ MC ABDH AC ABFG B JCFG Al АВСЈ G AR MR Quantity (Q) O o o O O
O OO The above graph shows the market demand function for a product. Assume that the market is served by a perfectly-price-discriminating monopolist with a constant marginal cost of production equal to $4 (MC = $4) and no fixed cost (FC = 0). The deadweight loss equals: DWL - $72 DWL - $0 DWL- -$48 DWL - $84 DWL-$36 $30 $28 $26 $24 $22 $20 Question 23 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Exercise A.6 A monopolist facing the demand curve Q = 42 – 0.6P operates with constant average and marginal costs equal to 20. a) Calculate the quantity, price and profit obtained by the monopolist. Represent graphically. (b) What quantity, what price and what benefit will you get if you can apply first-degree price discrimination? Calculate the consumer surplus and represent graphically. c) The monopolist warns that he can separate consumers into two distinct groups with demands Q1 = 12 - 0.1P1 and Q2 = 30 - 0.5P2. Calculate the quantities, the prices you will set in each market, and the profit you will make. Represent graphically.
Problem 3 Suppose that a monopolistic seller of flux capacitors faces the inverse demand curve P = 40 - and that the monopolist can produce flux capacitors at a constant marginal and average total cost of $5. (a) How many units will an unregulated monopolist sell? 1 (b) Suppose that the government imposes a price ceiling of $6. Find the firm's marginal revenue of the 10th, the 68th, and the 69th unit. (c) How many units will a profit-maximizing monopolist sell when the price ceiling is in place? At what price? (d) Show in a graph the deadweight loss of unregulated monopoly and the deadweight losses with the price ceiling. Does the price ceiling improve social welfare?
Give typing answer with explanation and conclusion A monopolist has a demand curve given by P = 88 − Q and a total cost curve given by TC = 34 + Q2. The associated marginal cost curve is MC = 2Q. Suppose the monopolist also has access to a foreign market in which he can sell whatever quantity he chooses at a constant price of 60. How much will he sell in the foreign market? What will his new quantity and price be in the original market?
A movie production company is planning to make its new movie available online so that it can enjoy monopoly power. Each time the movie is downloaded the production company has to pay 4 taka to the internet service provider. Now it is deciding what price to charge for each download. The numbers below shows the demand schedule for the company, Price per download dollar - 10, 8, 6, 4, 2, 0. Quantity of downloads demands 0, 1, 3, 6, 10, 15. a) Calculate the total revenue and marginal revenue per download. b) To maximize profit what price should be charged and how many downloads would need to be sold?
Suppose you are a monopolist and you have two customers, A and B. Each will buy either zero or one unit of the good you produce. A is willing to pay up to $35 for your product; B is willing to pay up to $10. You produce this good at a constant average and marginal cost of $8. If you could not engage in third-degree price discrimination, what price would you charge? OA $10. OB. $15. OC. $35. OD. $45. If you could practice third-degree price discrimination, you will earn a profit of $ (For simplicity, assume that if a consumer is indifferent between buying and not buying, he will buy.) Click to select your answer(s)
9. A monopolist produces a good at a constant marginal cost of 4. Suppose the monopolist is able to practice first-degree price discrimination (FDPD). The (in- verse) market demand function for the good is given by P-10-bQ where P is price, Q is quantity and b>0 is a constant. Let DL(Q) denote the deadweight loss at quantity Q, and let CS(Q) denote the consumer surplus at (a) Under FDPD, the marginal revenue function of the monopolist is the same as the market demand function. Is this true or false? Explain carefully. (b) Let Q be the monopolist's optimal quantity under FDPD. Calculate the value of CS(Q) - DL(Q). (c) Suppose a regulator imposes a per-unit tax of t on the monopolist and re- distributes tax revenue to consumers, so that tax revenue becomes part of consumer surplus. Let Q; be the monopolist's optimal quantity under FDPD given a per-unit tax of t. Calculate the value of t that maximises CS(Q)-DL(Q).
An Question 7. Assume that a monopolist sells a product with the cost function C = 300 + 20Q, where C is the total cost, and Q is the level of output. The inverse demand function is P = 60 - Q. where P is the price in the market. The firm will earn zero economic profit when it charges a The maximum profit the price of either $10 or $. The firm's profit-maximizing price is $ which is the difference between the total revenue TR-$ and the total firm earns is $ cost TC-$ Answer: