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- Assume a monopolist produces rum and knows there are two groups of rum consumers, 1 and 2, with different price elasticities. Group 1 is highly price elastic with E1=-10; Group 2 exhibits a lower price elasticity of E2=-2.5. Assume the company can separate these two groups (e.g., by handing out special ID cards) and can charge two different prices. If P2=$14, how much can it charge to Group 1?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 demand for a particular style of handmade Rwandan baskets is Qd = 1700 – 10P. Each basket maker has the following cost function: TCi = 1000 + 50 qi + .1 qi^2. Given this information, find the market outcomes under the various market structures below Multiplant monopoly. Suppose that a local entrepreneur decides to form a single monopoly by acquiring all the firms from part b and operating them as a single company (Each basket maker will still produce using the same cost function, but all the output will be marketed centrally). Now, how much output is produced at each plant (that is, by each basket maker), and how much by the firm as a whole? What is the monopoly price? What is the monopolist’s profit or loss per plant? What is the firm’s overall profit or loss for all 10 plants together? What is MCi and ATCi? What is MR?
- A pure monopoly sells 6 units of a product per day at a unit price of $15. If it lowers the price to $14, its total revenue increases by $22. This implies that its sold output increases by _____. rev: 05_15_2018Q28 If a single-price monopoly is presently producing an output at which marginal cost is less than marginal revenue, it can increase its profits by... a. Reducing output and keeping prices unchanged. b. Expanding output and raising price. c. Expanding output and lowering price. d. Reducing output and raising prices. e. Reducing barriers to entry.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 = 130 − 0.25P, and the marginal cost of production is $160.a. Determine the optimal number of units to put in a package. units b. How much should the firm charge for this package? $
- A monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer’s demand for the product is Qd = 50 - 0.25P, and the marginal cost of production is $120. Determine the optimal number of units to put in a package. How much should the firm charge for this package?A monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer’s demand for the product is Qd = 70 - 0.25P, and the marginal cost of production is $100.a. Determine the optimal number of units to put in a package. unitsb. How much should the firm charge for this package?$The car industry is characterised by heavy research and development activity. This activity has a high fixed cost and can only be undertaken by large firms with significant monopoly power. Sometimes the innovations of the car industry spill over into other industries. There is also a great deal of product differentiation, with certain brands enjoying reputation and What are the likely effects of these aspects of the industry on the market structure for HPCs? Examine this industry using the theory and models of industry structure. Should government be worried about any aspect of how an industry with this market structure will perform?
- Give at least five purposes of tobacco regulation act of 2003 (R.A. 9211)lf a monopolist can find buyers for 23 units at a price of $800, and if the marginal revenue due to the 24th unit is $560, the highest price at which the monopolist can find buyers for 24 units must be:Select one:O a. 780O b. 785Oc. 790 O d. 794Oe. 798The Telecommunications Regulatory Authority (TRA) is the UAE’s independent industry regulator. Since its launch in 1976, Etisalat has held a monopoly in the market. That changed in 2006 with the emergence of du, which was awarded a 20-year concession to operate fixed-line, wireless, internet and international telecoms services. UAE-based telecom operator recently announced that it was launching Virgin Mobile as a new telecom brand within the country. Assuming the trend continues and the government opens the market for more private and foreign players. You are required to a). Apply your understanding and concepts to investigate and summarize the major characteristics of the emerging market form in the telecom industry. b). Describe and analyze the pricing policies that you would expect to find in this industry. c). Explain the profit maximization strategy of this market form with the help of a suitable graph.