5. Suppose a company has a monopoly on a game called Monopoly andfaces a demand curve given by QT = 100-P and a marginal revenue functiongiven by MR = 100 - 2QT where QT equals the combined total number ofgames produced per hour in the company's two factories (QT = 91 +92). Iffactory 1 has a marginal cost function given by MC₁ = q1-5 and factory2 has a marginal cost function given by MC2 = 0.592-5, how much totaloutput will the company choose to produce and how will it distribute thisproduction between its two factories in order to maximize profits?

Given:Demand: Qt = 100 - PMR = 100 - 2QtQt = q1 + q2MC1 = q1 -5MC2 = 0.5q2 - 5 Remember that a…

Answered: 5. Suppose a company has a monopoly on…

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

ChapterB: Differential Calculus Techniques In Management

Section: Chapter Questions

Problem 1E

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An economist was trying to understand the relation between price, Marginal Revenueand Marginal cost in Monopoly and Perfect Competition. Determine equilibrium priceand output in the long run under Monopoly and Perfect Competition if the marketdemand curve is given as QD=500-2P and Marginal cost is Rs 50. Also comment onthe values obtained in the case of Monopoly and Perfect Competition
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.
Suppose a monopoly market has a demand function in whichquantity demanded depends not only on market price (P) butalso on the amount of advertising the firm does (A, measuredin dollars). The specific form of this function isQ =(20 - P2) (1 + 0.1A - 0.01A2).The monopolistic firm’s cost function is given byC = 10Q + 15 + A.a. Suppose there is no advertising (A = 0). What outputwill the profit-maximizing firm choose? What market price will this yield? What will be the monopoly’sprofits?b. Now let the firm also choose its optimal level of advertising expenditure. In this situation, what output levelwill be chosen? What price will this yield? What will thelevel of advertising be? What are the firm’s profits in thiscase? Hint: This can be worked out most easily by assuming the monopoly chooses the profit-maximizing pricerather than quantity.
George has a monopoly on burrito sales in a small town in Kansas. The burritos cost him a constant $5 each to produce. He faces following demand schedule for his product: Price Quantity Demanded $30 0 $25 1 $20 2 $15 3 $10 4 $5 5 $0 6 Under normal monopoly conditions, how many burritos should he produce, what price should he charge, and how much profit can he expect to make? Draw a graph under these assumptions showing (and calculating) producer surplus, consumer surplus, economic surplus, and deadweight loss. If George could engage in perfect price discrimination, how many burritos would he produce, what would his total revenue be, and how much profit would he earn? Draw a graph under these assumptions showing (and calculating) producer surplus, consumer surplus, economic surplus, and deadweight loss. Is society better off by allowing George to perfectly price discriminate? Defend your answer.
Only typed answer If a monopoly faces an inverse demand curve of p= 210−Q, has a constant marginal and average cost of $90,and can perfectly price discriminate, what is its profit? What are the consumer surplus, welfare, and dead weightloss? How would these results change if the firm were a single-price monopoly? Profit from perfect price discrimination (π) is $ _____ (Enter your response as a whole number.)
Assume that the demand for electric cars is p = 100-q (where q is the quantity and p is the price), and that an innovation can reduce the constant marginal cost of production from 70 to 60. What is the definition of nondrastic/drastic innovation? Confirm that the innovation for electric cars is nondrastic. Show that marginalcost would have to be reduced to less than 40 for theinnovation to bedrastic. Suppose that the industry is a monopoly (not threatened by entry). Howmuch is this firm willing to pay to acquire the innovation?
Assume that we are in a monopoly and demand curve is given by following expression:p(q) = 45 - q2And further it is known that marginal cost (MC) is given by:MC(q) = 6 + (q2/4)Under assumption that utility is maximized, answer:(a) Calculate marginal revenue (MR) and equilibrium point of monopoly. Graphb) Calculate consumer surplus (CS). Show it on the graphNOTE: remember that functions ARE NOT LINEAR. Consumer surplus is calculated as (see attached image)
6. A monopoly produces two goods with the following demand functions: 100-2p1 +P2 92 = 120 + 3p1 - 5p2 (a) Write down the expression of the profit function of the firm if its total costs (TC) are giver TC = 50 + 10q1 + 2042 %3D where q and 2 are the outputs of the two goods, and pi and p2 are the prices of the good 91 (b) Use Cramer's rule to find the values of pi and p2 which maximize the monopoly's profit.
2. Derive the monopoly equilibrium, i.e., the profit maximizing price and quantity, as well as the firm's profit, for each of the demand functions given below, assuming the firm's total cost of q units of output is given by C(q) = 4q a) b) c) g=e=²p+16 20000 2 9= P q=400 - 8p
Consider the fish market where demand is given by the following equation: P=52-Q where P is the price in dollars and Q is the quantity in kilos. All firms are identical and the marginal cost is 12. 15-If the market were competitive, what would the price be and how many units would be produced? You must provide your calculations. 16-If the market was made up of only one firm (a monopoly), what would the price be and how many units would be produced? You must provide your calculations. 17-If the market was made up of two firms (a duopoly) and they chose their level of production simultaneously: what would the price be and how many units would be produced by each firm? You must provide your calculations. 18-If the market was made up of two firms (a duopoly) and firm 2 was dominant (i.e. it chose its level of production first): what would the price be and how many units would be produced by each firm? You must provide your calculations. 19-Compare the quantities produced by each of the…
Monsanto holds significant regional monopoly power-in some regions they are a true monopoly being the only seller of agriculture seeds. If the elasticities of demand, JEDI, for soybean seeds is 3.5, and 3 for corn, then the profit-maximizing price (relative to marginal cost) for soybeans is times marginal cost, and the price is times marginal cost for corn. Round to one decimal if needed. A Moving to another question will save this response. « >
A perfectly discriminating monopoly has 2 potential consumers: consumer 1 and consumer 2. Consumer 1's demand curve is q;=12-2p and q2=12- p. The monopoly's cost function is c(Q)=8Q. What will be the quantities q1,92 the consumers will consume. O a. 91=0;92=4 O b. q1=2;92=2 O c. 91=4;92=0 O d. q1=2;92=3 O e. None of the other answers.

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