2. Consider the diagram below: price/cost 260 taka 220 taka 175 taka MC-ATC 55 110 MR a) If a firm is single -price monopolist, what price firm will charge and what is the profit maximizing output? Calculate the area of monopolist's profit (in tk), consumer surplus (in tk) and deadweight loss (in tk) from the information of the diagram. b) If the firm would work as a perfectly price discriminating monopolist, what amount of output firm would have produced? How firm would have charged price? Calculate the area of consumer surplus (in tk), profit(in tk) and deadweight loss (in tk) from the information of the diagram c) From your calculations in a) and b) which market structure has the highest welfare cost for a fim? Give adequate reason from your calculation. d) From your calculations in a) and b), which market structure has the highest profit and the lowest consumer surplus at the same time? Why it happens? [Show the breakdown of your calculations for a) and b)]
2. Consider the diagram below: price/cost 260 taka 220 taka 175 taka MC-ATC 55 110 MR a) If a firm is single -price monopolist, what price firm will charge and what is the profit maximizing output? Calculate the area of monopolist's profit (in tk), consumer surplus (in tk) and deadweight loss (in tk) from the information of the diagram. b) If the firm would work as a perfectly price discriminating monopolist, what amount of output firm would have produced? How firm would have charged price? Calculate the area of consumer surplus (in tk), profit(in tk) and deadweight loss (in tk) from the information of the diagram c) From your calculations in a) and b) which market structure has the highest welfare cost for a fim? Give adequate reason from your calculation. d) From your calculations in a) and b), which market structure has the highest profit and the lowest consumer surplus at the same time? Why it happens? [Show the breakdown of your calculations for a) and b)]
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter14: Monopoly
Section: Chapter Questions
Problem 9PA
Related questions
Question
![2. Consider the diagram below:
price/cost
260 taka
220 taka
175 taka
MC=ATC
55
110
MR
a) If a firm is single -price monopolist, what price firm will charge and what is the profit
maximizing output? Calculate the area of monopolist's profit (in tk), consumer surplus (in
tk) and deadweight loss (in tk) from the information of the diagram.
b) If the firm would work as a perfectly price discriminating monopolist, what amount of
output firm would have produced? How firm would have charged price? Calculate the
area of consumer surplus (in tk), profit(in tk) and deadweight loss (in tk) from the
information of the diagram
c) From your calculations in a) and b) which market structure has the highest welfare cost
for a firm? Give adequate reason from your calculation.
d) From your calculations in a) and b), which market structure has the highest profit and the
lowest consumer surplus at the same time? Why it happens?
[Show the breakdown of your calculations for a) and b)]](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fd5c6a53e-2f9b-4e24-9576-5590dc316aec%2F7ceb2cbb-8e8e-4578-bc61-8f3267f83974%2Fbatp78h_processed.jpeg&w=3840&q=75)
Transcribed Image Text:2. Consider the diagram below:
price/cost
260 taka
220 taka
175 taka
MC=ATC
55
110
MR
a) If a firm is single -price monopolist, what price firm will charge and what is the profit
maximizing output? Calculate the area of monopolist's profit (in tk), consumer surplus (in
tk) and deadweight loss (in tk) from the information of the diagram.
b) If the firm would work as a perfectly price discriminating monopolist, what amount of
output firm would have produced? How firm would have charged price? Calculate the
area of consumer surplus (in tk), profit(in tk) and deadweight loss (in tk) from the
information of the diagram
c) From your calculations in a) and b) which market structure has the highest welfare cost
for a firm? Give adequate reason from your calculation.
d) From your calculations in a) and b), which market structure has the highest profit and the
lowest consumer surplus at the same time? Why it happens?
[Show the breakdown of your calculations for a) and b)]
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