Consider the case where there is a consumer in the market with a demand f P = 40 - 2q. A monopolist has variable costs of VC = q2 where P is price nd q the quantity sold. The monopolist engages in first degree price scrimination using a two-part tariff, what is the fixed fee (F) and per-ur
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- Suppose a monopolist faces two groups of consumers. Group 1 has a demand given by P1=50-2Q1 and MR1=50-4Q1. Group 2 has a demand given by P2=40-Q2 and MR2=40-2Q2. The monopolist faces MC=AVC=ATC=$10 regardless of which group he supplies to. We can infer from the demand equations that Group ___ is the inelastic group because the demand is ____ than that of the other group. a. 2; flatter b. 2; steeper c. 1; steeper d. 1; flatterConsider 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.Are the following questions true or false? (A). A profit‐maximizing monopolist will produce output where marginal cost is equal to price(B). Suppose we know that a monopolist is maximizing profits. The monopolist has maximizedthe difference between marginal revenue and marginal cost.(C) In perfect competition, MUX = PX is the condition that ensures that firms produce the rightthings.(D). A monopoly earns total revenue of $5000 when it sells 500 units of output and totalrevenue of $5400 when it sells 600 units of output. Thus, the marginal revenue of the600th unit is $9.(E). We call a market where there is only one buyer for a good or service a monopoly.(F). There are a few firms selling differentiated products in a monopolistically competitiveindustry.(G). When a demand curve is a downward sloping straight line, the slope of the marginalrevenue curve is twice as steep as the demand curve.(H). The monopolistʹs profit-maximizing price will be above marginal cost, because at the…
- A monopolist book publisher with a constant marginal cost of 2 and no fixed costs sells novels in only two countries. Assume the inverse demand curve in country 1 is given by P1=10-2/3Qand the inverse demand curve in country 2 is given byPW=18-QAssuming book shipments across countries are banned so that price discrimination occurs. What is the equilibrium price and quantity of books sold by the monopolist in country 1?Options are: a)p=1, q=16b) p=1 q=12c) p=4, q=8d)p=6, q=6Continuing to assume price discrimination, what is the equilibrium price and quantity of books sold by the monopolist in country 2?a)p= 4,q=14b)p= 6,q=12c)p= 8,q=10d)p= 10,q=8If book imports are permitted in both countries so that price discrimination is impossible, what is the equilibrium price and quantity sold in the two countries combined?a)p=6,q=20b)p=7,q=20c)p=10,q=8d)p=12,q=6Suppose 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.Part A Suppose that the monopolist can produce a good with total cost TC = 24Q. Assume also that hemonopolist sells its goods in two different markets separated by some distance. The demand curves inthe first market and the second market are given by Q1 = 120 - P1/2 and Q2 = 360 - 3P2. If themonopolist can maintain the separation between the two markets, what level of output should beproduced in each market, and what price will prevail in cach market? Why are the two prices different?Verify the Lemer Index for cach market. Part B Suppose a monopoly faces a demand curve by Q = 154 - P/3. The monopolist has two plants. The firsthas a total cost function given by TC1, = 3Q21 and the second plant's total cost function is given byTC2 = 2Q22 How much total output will the monopoly choose to produce and how will it distributethis production between its two factories in order to maximize profits? Find monopolist's profits.
- A monopolist facing a demand p=1000 - 10Q has costs TC(Q) = 5Q^2 + 100Q. (a) What is the monopolist’s profit maximizing quantity and price? What is the induced DWL? (b) Suppose, on top of the costs above, the firm now also pays; (i) A flat fee of 1000 dollars, (ii) half of the profits, (iii) 150 dollars per unit sold, (iv) half of the revenue. Separately for each of these 4 cases, calculate the profit maximizing price and quantity for the monopolist with these new augmented costs. Does any of these scenarios alter the DWL associated with the monopoly, compared to (a)? (c) Forget about (a) and (b), and consider a monopoly in general. Show on a single graph with general costs (ATC and MC graphs) and a general demand, what quantity monopoly should produce in order to maximize ; (i) Total Revenue, or (ii) the number of units sold, under the condition that the firm does not make lossesI 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.A monopolist’s cost function yields constant average and marginal costs, with AC = MC = 5. Thefirm faces a market demand curve given by P = 29 – Q. 1. Calculate the marginal revenue curve, MR, for the monopoly. 2. Solve for the monopolist’s profit maximizing output and price and calculate the Lerner’s index and the profit of the monopolist. Show the profit maximizing decision of the monopolist and the profits earned diagrammatically. 3. What would be the socially optimal output and price? (Hint: this would be the output and price if the industry were perfectly competitive. That is, the profit maximizing rule would be P =MC) 4. Show diagrammatically the social cost of a monopoly. and Calculate the social cost of monopoly
- An industry produces its product, Scruffs, at a constant marginal cost of $50. The market demand for Scruffs is equal to Q = 75000 - 600P a. What is the value to a monopolist who is able to develop a patented process for producing Scruffs at a cost of only $45? b. If the industry producing Scruffs is purely competitive, what is the maximum benefit that an inventor of a process that will reduce the cost of producing Scruffs by $5 per unit can expect to receive by licensing her invention to the firms in the industry?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 monopolist facing a downward-sloping demand curve. Is marginal revenue is located ________ demand. Compared to a competitive market, a monopolist sells a _____________ quantity at a ___________- price. If, at the current level of output, a monopolist determines that the elasticity of demand is -0.15, then the monopolist will earn more money by _____________. Compared to a competitive market, a monopolist buys a ___________ quantity at a price. Fill in the blanks with: equal to / higher / lower / keeping output the same but increasing price / increasing output / decreasing output