A monopolist produces a good with a constant marginal cost of c = 10 and fixed cost of F = 1000. Demand for the product is given by D(p): = 90 - p. Which of the following statements is correct? The firm could be subjected to price regulation that enforces marginal cost prices and subsidises any losses of the company. Suppose the regulator's objective is to maximise the difference between total welfare and the cost of subsidies allocated to the company. Assume the social cost of subsidies S are BS where ≥ 0.
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- What is the usual shape of a total revenue curve for a monopolist? Why?Consider a monopolist with a demand equation P = 60 - 2Q, where P is the price in dollars and Q is the quantity. The monopolist is able to produce the output with a constant marginal cost of $20 which is equals to the average total cost. Assume that there is no fixed cost. A. If the monopolist practice single pricing, determine the price, quantity, profit, consumer surplus and producer surplus in this market with the aid of a suitable diagram. Appraise the efficiency in this market. B. If the monopolist were to practice perfect price discrimination, determine the quantity, profit, consumer surplus and producer surplus of the monopolist. Appraise the efficiency in this market. C. Consumers and the society are always worse off in a monopolised market compared to a perfectly competitive market. Do you agree? Examine the two (2) market structures and explain with the help of a suitable market diagram.Consider a market with the following characteristics. There is a single monopolist whose technology exhibits constant marginal costs; i.e., The market demand curve exhibits constant elasticity, e. There is an ad valorem tax on the price of the good sold so that when the consumer pays a pricePD, the monopolist receives a price of Ps = (1 - T)PD. (HerePDis the demand price facing the consumer andPsis the supply price facing the producer.) . The taxing authority is considering changing the ad valorem tax to a tax on output, t, so that we will havePDPs+ t. You have been hired to calculate the output tax t that is equivalent to the ad valorem tax T in the sense that the final price facing the consumer is the same under either scheme.
- Problem 2Suppose an airline has monopoly over a certain route. The estimated price elasticity of demand for business travelers is EB=-1.9, while the price elasticity of demand for leisure travelers is EV=-2.1. The airline wants to set the prices separately for business and vacation travelers.a) If the marginal cost of transporting each passenger is the same, and the airline is able to separate the two groups perfectly, what is the optimal surcharge (in %) on business travelers? (for example, if leisure travelers pay 100, and business travelers pay 200, then the surcharge is 100%)Answer= b) Suppose that in order to separate business travelers, the airline must offer them slightly better conditions on board (for example, serve them a meal). As a result, the marginal cost of flying a business traveler is 30% higher than for a leisure traveler. What is the optimal surcharge (in %) on business travelers in this case?Answer= c) Now suppose the airline introduces a Basic Economy fare, where…Marginal Analysis II Question 3 Assume that a monopolist faces a demand curve for its product given by: p=100−1qp=100-1q Further assume that the firm's cost function is: TC=470+9qTC=470+9q Using calculus and formulas (don't just build a table in a spreadsheet as in the previous lesson) to find a solution, what is the profit (rounded to the nearest integer) for the firm at the optimal price and quantity? Round the optimal quantity to the nearest hundredth before computing the optimal price, which you should then round to the nearest cent. Note: Non-integer quantities may make sense when each unit of q represents a bundle of many individual items. Hint 1: Define a formula for Total Revenue using the demand curve equation. Then take the derivative of the Total Revenue and Total Cost formulas to compute the Marginal Revenue and Marginal Cost formulas, respectively. Use these Marginal Revenue and Marginal Cost formulas to perform a marginal analysis. Hint 2: When computing the total…A monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer's demand for the product is Q = 80-0.5P, and the marginal cost of production is $ 100. a) Determine the optimal number of units to put in a package. b) How much should the firm charge for this package? c) How much additional profit does the company earn compared with charging this consumer a per-unit price?
- A monopoly’s inverse demand function is p= 100 - Q + (5A-A2)/Q: where Q is quantity, p is price and A is the level advertising. Its marginal cost of production is constant at 10 and its cost of a unit of advertising is 1. What are the firm’s profit-maximizing price, quantity, and level of advertising? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.ASAP PLZ Suppose a monopolist knows it has two types of customers. The inverse demand for the customers in the first market is P = 50 – Q while the inverse demand for the customers in the second market is P = 40 – 2Q. The marginal cost is €10 in both markets. Suppose the firm wishes to charge a two-part tariff to its customers but it cannot distinguish between the customers in the first and second markets. Calculate the entry (fixed) fee that the firm should charge in these circumstancesConsider a monopoly that sells a product to consumers with a constant marginal cost of $13. There are two potential consumers. As a prior belief, each consumer thinks that the product is worth either $29 or $19 with equal probability, and he/she learns the true value of the product after trying it out. Each consumer may have a different perception of the value of the product, and these perceptions are independent events. The product is non-durable. Suppose there are two periods and each consumer demands at most one unit of the product in each period. After the first period, a company named InfoteX could conduct an online marketing survey to learn consumers perceptions of the product. By purchasing the survey from InfoteX, the monopolist knows whether a consumer is happy with the product (i.e., he/she thinks the product is worth $29 instead of $19 after trying it out) or not and can offer personalized prices to customers in the second period. Then the monopolist should charge $_______…
- Consider any market that has an inverted demand curve given by P = 200-0.6Qd, where P is the market price and Qd is the quantity demanded. Whatever the market structure, it is known that the production of this good takes place through Cmg = CVme= $80.00. Consider that the production of this market can be done by a monopolist company or by two duopolists. If it is a duopoly, the companies will organize themselves as a Stackelberg duopoly and will each have a fixed cost of $1,500.00. If it is a monopoly, this company will have a lot of expenses with licenses with the government, as it is the only one to explore the resource. In this way, your fixed costs would reach $5,000.00. Given this information, evaluate the best balance for this market, from the point of view of consumers.A monopoly is considering selling several units of a homogeneous product as a single package. Analysts at your firm have determined that a typical consumer’s demand for the product is Qd = 50 − 0.5P, and the marginal cost of production is $60. a. Determine the optimal number of units to put in a package. units b. How much should the firm charge for this package?Question 1A manager of a nightclub realizes that demand for drinks is more elastic among students and is trying to determine the optimal pricing schedule. Specifically, he estimates the following average demand for his customer types: Under 25: q^r=18-5pOver 25: q=10-2p The two age groups visit the nightclub in equal numbers on average. Assume that drinks cost the club $2 to make. 1. If the manager cannot identify to which group his customers belong, what is the uniform monopoly price? 2. If the manager can identify to which group his customers belong, what price will he charge each group. Assume the manager can only charge a single price to each group 3. If the manager can charge a separate entry fee and a price per drink for each group, what two-part price will the manager set for reach group. 4. Now suppose that once again it is impossible to identify which group the customers belong. Suppose the manager lowers the price of drinks to equal to marginal cost and still wanted to…