Assume that every consumer has the inverse demand function P = 10 – Q and that marginal cost is always zero. There are 10 consumers. The monopolist wants to maximize profits by designing a two-part tariff. Calculate the two parts of the tariff, and calculate profits

Assume that every consumer has the inverse demand function P = 10 – Q and that marginal cost is always zero. There are 10 consumers. The monopolist wants to maximize profits by designing a two-part tariff. Calculate the two parts of the tariff, and calculate profits

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.2P

See similar textbooks

Related questions

Q: A monopolist facing a demand p = 1000 -10Q has costs TC(Q) = 5Q2 + 100Q (a) Calculate the…

A: Since (b) is incomplete, we shall only answer (a). Please resubmit the other part correctly in case…

Q: A monopolist has variable costs of VC = q² and no fixed costs and faces a demand curve of P = 24-q,…

A: The demand curve shows the inverse relationship between the price and quantity demanded. The demand…

Q: Price Marginal Cost $20 15 10- Demand 100 150 200 Quantity Marginal Revenue Refer to Figure 15-6. To…

A: There are four types of market structures. They are perfect competition, monopolistic competition,…

Q: 2. Consider a monopolist who has a cost function of c(Q) = 5Q. This monopolist faces two consumers,…

A: Profit maximization in economics refers to the short- or long-term process through which a…

Q: Suppose there are two classes of buyers in a market served by a monopolist. At this point the two…

A: A monopolist is a single seller and the sole producer in a monopoly market. The monopolist has the…

Q: Assume a monopolist’s only cost is constant marginal cost of $2. Further assume there are 10…

A: Given Marginal cost MC=$2 Inidivial demand function: p=10-2q .... (1) Total consumer…

Q: Suppose a monopolists cost and revenue information is given by p = 20 – 0.002q TR(q) = 20q – 0.002q²…

A: a) As per the question, this single price monopolist's profit maximizing output will occur at a…

Q: A monopolist faces a demand curve given by Q = 70-P. The monopolistis marginal revenue function is…

A: A monopolist is a person, organization, or company that has complete control over a market for a…

Q: Suppose that a monopolist faces two markets with demand curves given by: D1 (p1 ) = 100 – p1…

A: 1. When monopolist can price discriminate: D1 (p1 ) = 100 – p1 p1=100-D1 First Market: Total…

Q: Acme is a monopolist for a good with inverse demand P = 4000 – 6Q, where P is the price in dollars…

A: a) P=4000-6Q TVC=4Q2 MR=4000-12Q MC=8Q Profit maximization occurs when MR=MC 4000-12Q=8Q 20Q=4000…

Q: A monopolist sells a single good in two periods. There are two conumers who want to buy one unit of…

A: A monopolist has an opportunity to charge different prices from the customers because there is no…

Q: Suppose that the monopolist can produce with total cost: TC = 20Q. Assume that the monopolist sells…

A: Monopoly market refers to the market structure that can be identified by one seller, who sells a…

Q: Suppose that a monopolistic seller of designer handbags faces the following inverse demand curve: P=…

A: A monopolist produces the output where MR=MC.

Q: Problem 3 Consider a country called Midwest and is run by a monopolist. Market demand is P = 35 –…

A: "Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…

Q: ose that a monopolist, who sells all units at a uniform price, faces an inverse market demand curve…

A: Given Inverse demand curve of monopolist: P=200-4Q ....(1) Cost of production =0. So…

Q: A monopolist has a total cost curve represented by TC = 50 + 2Q + Q², and a marginal cost curve…

A: The profit maximizing condition is given as MC=MR MC= 2+2Q Given P=100-3Q So Total revenue=100Q-3Q2…

Q: 2. A monopolist faces the demand curve p=250-2q and its total cost function is given by TC=F+ 10q,…

A: Profit maximization occurs at the point where the marginal revenue and marginal cost are same.

Q: A monopolist is selling in a market with two types of consumers, type H and type L. There are 30…

A: Monopoly is a form of market in which there exists single seller and large number of buyers. In this…

Q: 4. For a monopolist with marginal cost of c, where c> 0, facing a market demand of X(p) = a – bp,…

A: Block rate tariff In this type of tariff different blocks are given according to the energy…

Q: (Two-part tariff) In a monopoly market, there are two consumers, their demand functions are: Q = 5 -…

A: demand of consumer 1=Q=5-p or p= 5 - Q demad of consumer 2 = Q=10-2p or p=5 - Q/2 we have TC = 0.5q…

Q: A monopolist has determined that at the current level of output the price elasticity of demand is…

A: A monopoly is the sole supplier of the good in the market and therefore a monopoly firm faces the…

Q: Suppose that a monopolist has a constant marginal cost curve. That is, for each unit of output that…

A: A monopoly is a form of the market when there exists a single supplier of a commodity. The supplier…

Q: Many schemes for price discrimination involve some cost. For example, discount coupons take up the…

A: Answer: Note: since the average total cost and marginal cost are constant and equal they will be…

Q: Suppose a monopolist faces two groups of consumers. Group 1 has a demand given by P1=50-2Q1 and…

A: There is a single firm in the monopoly competition. The single firm is price maker in the market.

Q: Many schemes for price discrimination involve some cost. For example, discount coupons take up the…

A: Note:- Since we can only answer up to three subparts, we'll answer the first three. Please repost…

Q: f the monopolist cannot maintain the separation between the two markets, calculate the optimal…

A: A firm that can offer distinct units of a good or service for varying prices is known as a…

Q: Suppose the demand functions facing the wireless telephone monopolist In Worked-Out Problem 18.4…

A: Demand functions are QDL=40-50P for each low demand consumer and QDH=200-50P for each high demand…

Q: Suppose that the monopolist can produce with total cost: TC = 20Q. Assume that the monopolist sells…

A: The profit maximizing production point for a monopolist corresponds to MR being equal to MC.

Q: A monopolist produces both Good A and Good B. There are two types of consumers. Enthusiasts are…

A: Enthusiasts are paying; Good A= 10 Good B= 7 Marginals are paying; Good A= 1 Good B= 6 Number of…

Q: 1. (Two-part tariff) In a monopoly market, there are two consumers, their demand functions are: Q =…

A: A market structure that is described in that a dealer sells a special item on the lookout. In a…

Q: n the next two problems, (1) and (2), consider a monopolist that maximizes profits and charges all…

A: Demand :P=100-2Q TR=PQ=100Q-2Q2 MR=100-4Q (1) When Marginal Cost is zero, profit maximization…

Q: 1) Suppose there are two consumers. Consumer 1 has the demand func- tion y(pı) 20 – P1/2, the second…

Q: A monopolist's cost function yields constant average and marginal costs, with AC MC 6. The firm…

A: Solution- Given in the questionAC (Average Cost) = MC (Marginal Cost ) = 6…….(1)Market demand curve…

Q: A monopolist sells a good to two demographically separate markets. The demand for its good in the…

A: Since you have posted multiple questions , I have solved the first three subparts for you .

Q: Suppose a monopolists cost and revenue information is given by p = 20 – 0.002q TR(q) = 20q – 0.002q?…

Q: 1. A monopolist with cost function c(Q) = faces an inverse demand function given by P(Q) = (a) Find…

A: ed(Elasticity of demand) is the ratio of %change in Qd(quantity demanded) and %change in P(price). A…

Q: A monopolist has a single customer with the demand curve P=20-Q. (So this customer will buy…

A: Demand function : P = 20 - Q MC for both the firms = 0 A monopolist maximizes his profits at the…

Q: A monopolist faces a market demand curve given by: Q= 70−p. a) If the monopolist can produce at…

A: Since you have posted a question with multiple subparts, we will solve the first three subparts for…

Q: A monopolist is selling sneakers to students and nort-students. The Marginal Cost of an extra pair…

Q: Suppose the monopolist has the folloving demand function: Q= 12-0.5P The marginal cost is equal to…

A: Hi! thanks for the question but as per the guidelines we can answer up to three subparts at one…

Q: 2. Consider a monopolist who has a cost function of c(Q) = 5Q. This monopolist faces two consumers,…

A: profit maximization is the short run or long run process by which a firm may determine the price,…

Q: Suppose that the monopolist can produce with total cost: TC 20Q. Assume that the monopolist sells…

A: The Monopoly firm can exercise the price discrimination to increase the profit level. Firm tends to…

Q: Part A Suppose that the monopolist can produce a good with total cost TC = 24Q. Assume also that he…

A: Part A: Its a case of third degree price discrimination - Profit maximization condition is :…

Q: Suppose that the monopolist can produce with total cost: TC = 10Q. Assume that the monopolist sells…

A: The monopoly firm can follow the price discrimination strategy to maximize the profit. However,…

Q: A monopolist with a marginal cost MC = 2 faces two types of customer groups. Type 1 has it inverse…

Q: Consider the case where there is a consumer in the market with a demand of P = 60 - 2q. A monopolist…

Q: 3. A monopolist sells two products x and y for which the demand functions are: x = 50 – Px y = 36 –…

A: We have been given that the demand function for product x and product y as x=50-Pxy=36-Py Monopolist…

Q: A monopolist is selling sneakers to students and non-students. The Marginal Cost of an extra pair of…

A: Student Demand: Q1 = 235-P Non-student Demand: Q2 =400-2P Marginal Cost: MC = 9

Question

I need ans 3

In the next two problems, (1) and (2), consider a monopolist that maximizes profits and charges all consumers the same price. The inverse demand function is P = 100 – Q, where P is the price and Q is output. Calculate the deadweight loss to consumers (if any) and to the monopolist (if any).

(1) Marginal cost is always zero.

(2) Marginal cost is MC = Q.

(3) Assume that every consumer has the inverse demand function P = 10 – Q and that marginal cost is always zero. There are 10 consumers. The monopolist wants to maximize profits by designing a two-part tariff. Calculate the two parts of the tariff, and calculate profits.

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Given

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Similar questions

Draw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the monopolists profit-maximizing output level. Now, think about a slightly higher level of output (sayQ0+1). According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?
How can a monopolist identify the profit-maximizing level of output if it knows its total revenue and total cost curves?
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?
Imagine a monopolist could charge a different price to every customer based on how much he or she were willing to pay. How would this affect monopoly profits?
How does the demand curve perceived by a monopolist compare with the market demand curve?
What is the usual shape of a marginal revenue cuwe for a monopolist? Why?
How does the quantity produced and price charged by a monopolist compare to that of a perfectly competitive film?