Market demand for the nuclear substance pluranium is given below, along with the TR for the given demand schedule. Pluranium is supplied to the world market by a monopolist. Suppose that the marginal cost of supplying an extra megatonne of pluranium is $20 and the business has FC=$60. Suppose that the monopolist can 3rd degree price discriminate and segregate market demand into two global regions – North world and South world - as follows: North world Price ($ per megaton) 80 70 60 50 40 30 20 10 0 Quantity (megatons) quantity would be 0 1 2 3 3 3 3 3 3 South world Price ($ per megaton) 80 70 60 50 40 30 20 10 0 If they were only to service South World, then the price would be Quantity (megatons) 0 0 0 0 1 2 3 45 and the

Market demand for the nuclear substance pluranium is given below, along with the TR for the given demand schedule. Pluranium is supplied to the world market by a monopolist. Suppose that the marginal cost of supplying an extra megatonne of pluranium is $20 and the business has FC=$60. Suppose that the monopolist can 3rd degree price discriminate and segregate market demand into two global regions – North world and South world - as follows: North world Price ($ per megaton) 80 70 60 50 40 30 20 10 0 Quantity (megatons) quantity would be 0 1 2 3 3 3 3 3 3 South world Price ($ per megaton) 80 70 60 50 40 30 20 10 0 If they were only to service South World, then the price would be Quantity (megatons) 0 0 0 0 1 2 3 45 and the

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.2P

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Consider any market that has a demand curve given by: Qd = 240 - 2P. Where Qd is the total quantity demanded in the market, given in millions of units and P is the market price, calculated in monetary units. Imagine that there are 2 Cournot oligopolists operating in this market with Cmg = CVme = 15 and fixed monthly costs equal to 1,400. About this market, ask yourself: a) What is the reaction curve of oligopolists? b) What will be the production of each of the companies? c) What is the selling price practiced by oligopolists? d) What is the profit of each of the oligopolists? e) Imagine that one of the companies managed to implement a process innovation capable of halving its Cmg and CVme, so that they would go from 15 to 7.5. This investment implies an additional monthly expense of $1,800. Discuss the statement: "If this situation occurs, the innovative company will not implement variable cost reduction, as the quantity supplied in the market will increase very little; prices will…
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