Assume a monopolist can prevent resale of its product and it has complete information about each one of its customers. Even though each customer has a different demand curve, the seller can identify each customer's demand curve before a purchase takes place. It faces the inverse market demand of P 160- 100 with marginal cost of MC-10 + 5Q. The total surplus at the profit-maximizing result is S O 500 O 400 O 200
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the total surplus at the profit-maximizing result is $____.
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- Suppose that the monopolist from Question 4 is now forced to charge the same price in both markets. Using thedemand functions and cost function from Question 4, what is the total inverse demand in this case? What is theprofit-maximizing price? What is the monopolist’s profit? (Question 4 = A monopolist is operating in two separate markets. The inverse demand functions for the two markets are P1 = 35 – 2.5Q_1 and P2 = 30 – 2Q_2. The monopolist’s total cost function is TC(Q) = 8 + 5(Q_1 + Q_2). Q_1 means Q subscript 1Suppose a monopolist can produce any level of output it wishes at a constant marginal (and average) cost of 5cedis per unit. Assume the monopolistsells its goods in two different markets, separated by some distance. The demand curve in the first market is given by Q1 = 55 − Q1and the demand curve in the second market is given by Q2 = 70 − 2P2. a. If the monopolist decides to charge a single price in the two markets: i. What should this single price be? ii. What will be the total quantity that will be demanded? iii. Find the profit that the monopolist makes by charging a single price.c. Compare the price, quantity, cost, and profit made by the firm under (a), when the firm charges different prices in the two markets and (b) when the firm charges the same price.Please no written by hand and no emage Suppose that the monopolist sells its goods for two segments of the population and the demand -2 functions are given by Q₁ 120P₁² and Q₂ = 320P₂³. If the monopolist can produce at AC-MC-6 and can discriminate the prices what are the optimal prices, respectively? $6,$9 $9, $12 $12, $9 $9, $6 =
- Consider a monopolist who is selling his blockbuster drug in two markets where one market is much larger than the other. Suppose the demand in the two markets is given by q1 = 30 − p1 and q2 = 3 − p2 (quantity is measured in millions of complete dosages and price is in your favorite currency) and the marginal cost of production and distribution is roughly the same and equal to 1 per unit (c=1). This problem asks you to compare equilibrium outcomes (prices, quantities, profits, consumer surplus, and consumer surplus per unit of output) when the monopolist can price discriminate across the two markets versus when it must set a uniform price. It then asks you to comment on some recent policy proposals. For each market separately, set up and solve the monopolist’s profit-maximizing problem. Specifically, write down/compute the following. Inverse demand and the profit functions. Equilibrium prices (), quantities () and profits () Consumer surplus () and consumer surplus per unit of…we had two buyer types for pharmaceuticals. One with inverse demand P = 8 – 0.25Q, and one with inverse demand P = 4 – 0.1Q. Marginal cost of the monopolist was constant and equal to 2. If the monopolist cannot price discriminate (so they charge a single price to everyone), show whether their profits are higher serving only the high demand market, or serving both markets. Show whether consumer surplus is higher or lower with or without price discrimination at the monopolist’s optimal solution in either case.. Suppose you are a manager of a County government project that is meant to provide rent-regulated housing units in low-income settlements. Using your knowledge of equilibrium, advice the Governor whether this policy will be a success. b. A Monopolist producing and supplying cooking gas to Mombasa city faces the demand function. Q = 8800 – 20P. Its cost function is given by TC = 20Q + 0.05Q2. i. Determine the quantity of cooking gas she will produce and the price she will charge to maximize profits and determine her profit. ii. Explain how her profits she will affected if regulators forced her to operate like a perfectly competitive firm. iii. Illustrate and compute dead-weight loss and lost consumer surplus associated with her Monopoly operations.
- Suppose a monopolist can produce any level of output it wishes at a constant marginal (and average) cost of 5cedis per unit. Assume the monopolistsells its goods in two different markets, separated by some distance. The demand curve in the first market is given by Q1 = 55 − Q1and the demand curve in the second market is given by Q2 = 70 − 2P2.a. If the monopolist can maintain the separation between the two markets: i. what level of output should be produced in each market, and what price will prevail in each market? ii. Determine the own price elasticity of demand in the two markets. In which market is demand more elastic? What conclusion can you make about the relationship between the prices and elasticity? iii. What are total profits in this situation? b. If the monopolist decides to charge a single price in the two markets: i. What should this single price be? ii. What will be the total quantity that will be demanded? iii. Find the profit that the monopolist makes by charging a…Suppose a monopolist faces two markets withdemand curves given by D1(p1) = 200 − p1D2(p2) = 100 − 2p2Assume that the monopolist’s cost function is c(y) = y2 1. What is the optimal prices for the monopolist if it can charge different prices in these markets?2. What is the optimal price if the monopolist must charge the same price in each market?3. How much total consumers’ surplus changes between the two separate prices and the sameprice cases?A nightclub manager realizes that demand for drinks is more elastic among students, and is trying to determine the optimal pricing schedule. Specififically, he estimates the following average demands: • Under 25: qr= 18 − 5p • Over 25: q = 10 − 2p The two age groups visit the nightclub in equal numbers on average. Assume that drinks cost the nightclub $2 each. (a) If the market cannot be segmented, what is the uniform monopoly price? (b) If the nightclub can charge according to whether or not the customer is a student but is limited to linear pricing, what price (per drink) should be set for each group? (c) If the nightclub can set a separate cover charge and price per drink for each group, what two-part pricing schemes should it choose? (d) Now suppose that it is impossible to distinguish between types. If the nightclub lowered drink prices to $2 and still wanted to attract both types of consumers, what cover charge would it set? (e) Suppose that the nightclub again restricts itself…
- Suppose a discriminating monopolist is selling a product in four separate markets in which demand functions are: Q1 = 300 – P1; Q2 = 200 – 0.5 P2; Q3 = 150 – 0.4P3 and Q4 = 75 – 0.25P4. Assume further that the total cost of the firm is given as TC = 65,000 – 100Q. As an economic adviser you are required to determine: The prices to be charged in the four markets and the amount of output to be sold in each market so that total profits can be maximized. Calculate the total profit to be made from the strategy of price discrimination. Explain what would have happened if this monopolist did not implement this strategy of price discrimination. Elasticities in each market and comment.Assume that a monopolist sells a product with a total cost function: TC = 1200+0.5Q2. The market demand curve is given by the equation: Q=300-P For what range of output will the firm's revenue be increasing? For this monopolist, the profit-maximizing price is _________, at which it will sell __________ units of output. At this price, the monopoly will earn profit equal to ____________ . If this market were supplied by many firms with the same cost function, how much would be produced? _____________ At what price would it be sold? ______________ Calculate the loss in efficiency in this market due to the monopoly _____________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.