
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- Suppose a monopolist sells a product to faculty members and students on the campus. If the firm sets a single price, the monopolist produces 5000 units and sell them at the price of $3 per unit. At this price, the price elasticity of demand for faculty member is -2.5. And the price elasticity of demand for students is -1.5. The monopolist is considering whether she should set different prices for the faculty members and students and asks for your advice. The monopolist is thinking about charging faculty members a 10% higher price. The quantity demanded by the faculty members would fall by %. The monopolist is thinking about charging students a 10% higher price. The quantity demanded by the students would fall by %. Who should the monopolist charge more? mention faculty and students and how mucharrow_forward19 7+ 5+ 3+ 1- 20 40 60 80 MR MC A 100 Qarrow_forwardAssuming that the firm is the only producer in a market, the social cost of the output decision of a profit-maximizing monopoly firm. Can you discuss the assumption that the government wants to set a price ceiling that maximizes the monopolist's output? What price should the government set? Thank you!arrow_forward
- For a monopolist, we know that the MARKET DEMAND CURVE they face is given by the equation: Qd = 100 - 10*P (where Qd is market demand and P is the price)arrow_forwardSuppose that the demand for good x is given by : P=100-8q Marginal cost of production is given by : P=10+2q MR is given by 100-16q What will the equilibrium quantity and price be in a competivite market? Calculate consumer, producer and total surplus. If we contrast this market to one in which good x is produced by a monopoly, what will be the quantity produced and the price each unit will be sold as? Calculate consumer, producer and total surplus. What will be the loss in total surplus due to a monopolist?arrow_forwardUnder a monopoly, demonstrate with with a demand curve, marginal revenue curve, and cost curve why a binding price ceiling may actually increase the quantity sold. Thank you.arrow_forward
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