Figure 15-6PriceMarginal Cost$201510Demand100150200QuantityMarginal RevenueRefer to Figure 15-6. To maximize its profit, a monopolist would• choose which of the following outcomes?O100 units of output and a price of $20 per unit200 units of output and a price of $20 per unit150 units of output and a price of $15 per unit100 units of output and a price of $10 per unit« PreviousNext

There are four types of market structures. They are perfect competition, monopolistic competition,…

Price Marginal Cost $20 15 10- Demand 100 150 200 Quantity Marginal Revenue Refer to Figure 15-6. To maximize its profit, a monopolist would choose which of the following outcomes? 100 units of output and a price of $20 per unit 200 units of output and a price of $20 per unit O 150 units of output and a price of $15 per unit O 100 units of output and a price of $10 per unit

Price Marginal Cost $20 15 10- Demand 100 150 200 Quantity Marginal Revenue Refer to Figure 15-6. To maximize its profit, a monopolist would choose which of the following outcomes? 100 units of output and a price of $20 per unit 200 units of output and a price of $20 per unit O 150 units of output and a price of $15 per unit O 100 units of output and a price of $10 per unit

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 32P: Draw the demand curve, marginal revenue, and marginal cost curves from Figure 9.6, and identify the...

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Draw the demand curve, marginal revenue, and marginal cost curves from Figure 9.6, and identify the quantity of output the monopoly wishes to supply and the price it will charge. Suppose demand for the monopolys product increases dramatically. Draw the new demand me. What happens to the marginal revenue as a result of the increase in demand? What happens to the marginal cost curve? Identify the new profit-maximizing quantity and price. Does the answer make sense to you? Figure 9.6 Illustrating Profits at the HealthPill Monolpoly
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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.
E4 Suppose that the monopolist can produce with total cost: TC = 10Q. Assume that the monopolist sells its goods in two different markets separated by some distance. The demand curves in the first market and the second market are given by Q1 = 120 - 4P1, and Q2. = 240 - 2P2. Suppose that consumers can mail the product from cheaper location to a more expensive location freely (mailing cost $0). What would be the monopolist profit? 3750,3500,5250,4000.
In a market where a monopolist can charge different prices to different groups, which of the following groups will likely be charged the lowest price?O a. the group for which the good is a necessityO b. the group for which the good makes up a large portion of income (big-ticket item)O c. the group for which the good has no good substitutesO d. the group for which the good makes up a small portion of income (small-ticket item)O e. The groups described in (a), (c), and (d) will all get charged a lower price than the group described in (b).
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 profit of each of the oligopolists? b) 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 remain very close to what they are today and its profits will not increase"
4. Suppose that a monopolist can produce any level of output it wishes at a constant marginal (and average) cost of KShs.5 per unit. Assume further that the monopolist sells its goods in two different markets that are separated by some distance. The demand curve in the first market is given by: Q1 = 55 – P1 Page 2 of 3 The second market’s demand curve is given by: Q2 = 70 – 2P2 a) If the monopolist can maintain the separation between the two markets, what level of output should be produced in each market and what prices will prevail in each market. b) What are the total profits in the situation above? c) How would the above answers change if it only cost demanders KShs.5 to transport goods between the two markets? d) What would be the monopolist’s new profit level in this situation? e) How would your answer change if transportation costs were to fall to zero?
Suppose both a monopolist and a perfectly competitive firm are producing in theirrespective markets at a point where marginal cost is $8 and marginal revenue is $10. Whatshould the profit-maximizing firms do? Group of answer choices Both the monopolist and the perfectly competitive firm should increase output until MC= MR. The monopolist should keep producing at this level but the perfectly competitive firmshould decrease output until MC = MR. The monopolist should increase output but the perfectly competitive firm should shutdown. Both the monopolist and the perfectly competitive firm should decrease output until MC= MR.
Suppose that a monopolist supplies a product in two distinct markets, LA and SF. The demand functions for thetwo markets are PLA = 52 – 4QLA and PSF = 70 – 7QSF. The monopolist has a fixed cost of $20 and a constantmarginal cost of $10 per unit.a. If segmenting is feasible, what are the profit-maximizing prices, quantities, and maximized profit?b. If segmenting is NOT feasible, what is the profit-maximizing price, quantity, and maximized profit?c. How much is the difference in total consumer surplus in the two cases? Which case makes consumers better off?
Figure: Maximum Willingness to Pay P $100 75 45 100 100 110 125 2 125 MR MC What is the profit-maximizing quantity for this monopolist? O 110 75 D
Question 3 A firm may be deemed a monopolist, even though it is not the only seller in a market, because what matters is size in relation to the market. True 5 pts O False