Assume that I am the last video recorder repair person in the whole of Canada. The HHI will be but I would still have a low market power since there are a. 10,000; there are no substitutes for what I do b. none of the answers offered are accurate. O c. 10,000; few people need more service O d. 0, few people need my service e. 0, no competitors
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- Return to Figure 9.2. Suppose P0 is 10 and P1 is 11. Suppose a new firm with the same LRAC curve as the incumbent tries to bleak into the market by selling 4,000 units of output. Estimate from the graph what the new firms average cost of producing output would be. If the incumbent continues. to produce 6,000 units, how much output would the two films supply to the market? Estimate what would happen to the market price as a result of the supply of both the incumbent firm and the new entrant. Approximately how much profit would each firm earn? Figure 9.2 Economics of Scale and Natural MonoployTable 14.13 shows information from the supply curve for labor for a monopsonist, that is, the wage rate required at each level of employment. What is the monopsonists marginal cost of labor at each level of employment? If each unit of labors marginal revenue product is 13, what is the firms profit maximizing level of employment and wage?Table 14.11 shows levels of employment (Labor), the marginal product at each of those levels, and a monopolys marginal revenue. What is the monopolys marginal revenue product at each level of employment? If the monopoly operates in a perfectly competitive labor market where the going market wage is 20, what is the films profit maximizing level of employment?
- Tad's bait shop has a monopoly on the bait market at Sanderson's Lake. The demand curvefor bait is QD = 36 - 6P. Tad has two employees he can use to search for bait. The marginalcost of using Amanda to search for bait is: MCM (QM) = 0.5??. The marginal cost of usingAndrew to search for bait is: MCN(QN) =QNa. Determine how many units of bait each employee should gather.b. Which employee gathers more and why?c. What is the price Tad receives for selling the bait?(a) Explain why we might expect labor demand for a monopolist in the product market to be less elastic than labor demand under perfect competition ?True/False 1. In a principal-agent relationship between owner and manager with hidden e§ort, the owner can design a wage scheme that insures the optimal Örst best e§ort by the manager regardless of the risk aversion of the manager. Justify your answer. 2. Consider a monopoly that faces an inverse demand curve and has a linear cost function. The monopoly would be indi§erent when maximizing proÖts between either choosing quantities or choosing prices. 3. A multiproduct Örm that as monopoly power over several products sets lower prices than separate Örms (each controlling a single product) when the products are substitutes or when there are economies of scope. 4. In the dominant Örm model (‡ la Hotelling) an increase in the marginal cost of the dominant Örm (with constant marginal costs) implies that proÖts necessarily decrease. 5. Suppose that an industry has 10 Örms where the market shares are ordered from the most to the least dominant Örm f0:5; 0:37; 0:05; 0:03; 0:02; 0:01;…
- Suppose that the Ebay warehouse behaves as a monopsonist in the local labor market. Assume that its labor supply curve is w(LS) = 4LS and its labor demand curve is w(LD ) = 42.8−2LD. To maximize its profits: a. how many units of labor will Ebay hire and b. what wage will Ebay pay? Now suppose that the local labor union goes on strike and Ebay is eventually forced to increase the pay of its workers to a competitive wage. What wage would Ebay then have to pay? c. Find competitive wage The correct answers are: a. 4.28 b. 17.12 c. 28.52Suppose we are studying the long-run competitive market for robots, the market demand for robots isgiven byD(p)=24p. All the firms are identical with the following cost curveC(y)=y22+8. a)What is the long-run competitive market equilibrium? Rick is a single consumer in the market; his consumption of robots is given byDi(p)=Mp, whereMis his fixed income. Rick is also a government regulator for the robot market; he decides if themarket is competitive or a monopoly.Morty is a firm in the market (he faces the same cost curve as everyone else:C(y)=y22+8). Mortywould like to operate as a monopolist (instead of a firm in a competitive market). b)How much would Morty have to pay/compensate Rick in order for Rick to allow Morty to operateas a monopolist (The market demand curve is the same as part a))? c)Suppose instead this was an oligopoly market with 2 firms engaged in Bertrand competition; bothfirms face the same cost curve and demand curve as part a). How much…ASAP Suppose the market for kiwis has a demand curve of the form: Qd = 200-2Pd And that the costs of the monopoly producer of kiwis are determined by Total Cost (Q) = Variable Cost (Q) + Fixed Cost. C (Q) = Q² + 100. That is, its marginal cost will be: MgC (Qs) = 2Qs = Ps A. If the Government regulates this monopoly so that it does not generate welfare losses, how much should the maximum price to impose be? B. If the Government decides to grant a subsidy to reach the amount of the social optimum, would it stop having a loss of welfare? C. Bonus How much the subsidy should be for each unit so that the amount is reached in the social optimum.
- Polly’s Pet Store has a local monopoly on the grooming of dogs. The daily inverse demand curve for pet grooming isP = 20 - 0.1Qwhere P is the price of each grooming and Q is the number of groomings given each day. This implies that Polly’s marginal revenue isMR = 20 - 0.2QEach worker Polly hires can groom 20 dogs each day. What is Polly’s labor demand curve as a function of w, the daily wage that Polly takes as given?The Key West Parrot Shop has a monopoly on the sale of parrot souvenir caps in Key West. The inverse demand curve for caps isP = 30 - 0.4Qwhere P is the price of a cap and Q is the number of caps sold per hour. Thus, the marginal revenue for the Parrot Shop isMR = 30 - 0.8QThe Parrot Shop is the only employer in town and faces an hourly supply of labor given by w = 0.9E + 5where w is the hourly wage rate and E is the number of workers hired each hour. The marginal cost associated with hiring E w orkers, t herefore, i sMCE = 1.8E + 5Each worker produces two caps per hour. How many workers should the Parrot Shop hire each hour to maximize its profit? What wage will it pay? How much will it charge f or each cap?This is a monopoly in the product market. Use the numbers given for labor input, TPP and P to answer various questions. You should do these questions using a scrap paper and then fill in the blanks, as many answers may depend on other answers. Labor Input TPP = Q P MPP Revenue MRP MR 10 100 50 n.a. 5000 n.a. 11 109 49 12 116 48 13 121 47 14 124 46 15 125 45 For this question, find MRP starting with labor input = 11. Write the integer numbers with no decimal place.
