Suppose that you're working to calculate a monopolist's profit-maximizing uniform price in a market where the inverse demand function is P(y) = 52-3y and you've reached the point that you know the monopolist's profit maximization condition is 52-6y = 4 What is the profit-maximizing QUANTITY? y = 8 y = 14 Y= 28
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- Imagine that you ale managing a small firm and thinking about entering the market of a monopolist. The monopolist is currently charging a high price, and you have calculated that you can make a nice profit charging 10 less than the monopolist. Before you go ahead and challenge the monopolist, what possibility should you consider for how the monopolist might react?. Let the demand curve for a monopolist’s product be P = 100 – 2Qd and the marginal cost of production be constant at MC = 10. Suppose that the firm considers moving from a uniform pricing strategy to a two-block tariff where the first block provides 15 units at a price of P1 = $70 and the second block provides an additional 15 units at a price of P2 = $40. How much does the monopolist’s profit rise with this scheme?10. Suppose that a monopolist faces a linear demand curve having a vertical intercept of (Q.a) and a horizontal intercept of (b,0). Denote the midpoint on the segment ab by the letter m (i.e., the line segment am is equal in length to the line segment bm). Denote the coordinates at point m by (Q*, P*). Now suppose that you overheard a student in ECON 2450 reason in the following manner: A profit-maximizing monopoly firm that sells all units that it produces at a uniform price. The firm would never produce more than Q* (or alternatively, will never charge a price below P*) since doing so reduce its total revenue as well as increasing its total cost. Even if the cost of production were negligibly small or even zero, the monopolist's profits would fall if it produced more than Q*." Is this argument correct? If so explain why. If not, explain why not.
- 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 15A monopolist has the following information: (use this to answer questions 8-10) Demand: P = 100 - .1Q AC = MC= 10 MR = 100 - .2Q at the profit maximizing level of output, economic profit is: O 20,150 20,250 20,350 20,450What is the usual shape of a marginal revenue curve for a monopolist? Why? How can amonopolist identify the profit-maximizing level of output if it knows its total revenue andtotal cost curves?
- Q4. The following curve shows the Profit Maximization in Monopoly market Dollars per unit Demand P = AR Profit maximization MR = MC $90 80 70 60 50 40 38 30 22.23 20 10 T T T T Economic Profits ATC AVC MC MR 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Units A- For the monopolist, what is the relation between demand curve and Marginal revenue curve. B- what are the relations between Monopolist Price, average revenue and Marginal revenue C- what is the relation between Price and average cost for the monopolist. D- Is there and Social Benefits From Monopoly ?The following figure shows the demand for monopolists Price 20 10 O Quantity a) 60 b) 59 c) 96 d) 62 Assume that the monopoly has two plants-plant 1 and plant 2. Cost function is given for plant c;(q;)=2+4gifq; > 0 1. i=1,2. c;(q) = 0,otherwise Find the optimal profits. 10 20What is the usual shape of a marginal revenuecurve for a monopolist? Why? When a monopolist identifies its profit-maximizingquantity of output, how does it decide what price tocharge?
- Suppose that a monopolist’s demand curve is given by P(y) = 28−3y and its marginal cost is given by MC(y) = y, where y denotes output.a. Find the profit-maximizing quantity and price for this monopolist. Illustrate your answer with a graph.b. Calculate the consumer surplus, producer surplus and thedeadweight loss of this monopoly. (You may find it helpful to refer tothe graph you drew for part a.)c. Carefully explain why a monopoly creates a deadweight loss.tion 9 of 20 Submit All Monopoly: End of Chapter Problem 11. Sandy owns the only landscaping company in town that specializes in flower gardens-thus, Sandy is a monopolist. At a quantity of 10 Hower gardens, the marginal cost of producing one more flower garden is $300, and the marginal revenue from selling one more flower garden is $250. To maximize profits, Sandy should decrease output to the point where MR= MC. The market price won't change because monopolists are price takers. decrease output to the point where MR > MC and increase price based on the demand curve. decrease output to the point where MR = MC and increase price based on the demand curve. increase output to the point where MR= MC and decrease price based on the demand curve. 10-43 PM A ENG 11/21/2021 Rain... OO00Barbara is a producer in a monopoly industry. Her demand curve and total cost curve are given by Q = 160 - 4P and TC = 4Q. Barbara will produce ✓ units. Barbara will charge a price of Barbara will make a profit of Suppose now the government imposes a tax of 4 dollars on each unit sold. With the tax: Barbara will produce ✓ units. Barbara will receive a price per unit of higher). Barbara will make a profit of In addition to the tax, suppose the government imposes a business levy (a fixed cost) of $500. With this levy: Barbara will produce Barbara will charge a price of Barbara will make a profit of ✓. Note: we're looking for the Barbara receives, not the price consumers pay (which will be ✓ units. ✓. Note: we're looking for the Barbara receives, not the price consumers pay (which will be higher).