[Q: 12-1909965] Consider an advertising monopolist that faces a market demand function P(Q,A) = 885 –0.5Q + A0.5, has no fixed costs, has constant marginal costs of $30 per unit of Q, and a $1 cost per unit of advertising A. The profit function is: 1(Q,A) = (885- 0.5Q + A0.5) Q- 30Q - A. What is the profit-maximizing quantity Q? A. 1710 B. 1539 C. 2223 D. 2565 E. 1026
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- A monopolist's demand function is P = 1624 - 4Q, and its total cost function is TC = 22,000 + 24Q -4Q2 + 1/3 Q3, where Q is output produced and sold. At what level of output and sales (Q) and price (P) will total profits be maximized? At what level of output and sales (Q) and price (P) will total revenue be maximized? At what price (P) should the monopolist shut down?A monopolist sells to two groups of consumers who have demand curves given as follows: q1 (p1) = 100-p1 q2 (p2) = 100-2p2 The monopolist’s marginal cost is constant at $20 per unit, and there are no fixed costs. What price will it charge if it cannot price discriminate? How many units will it sell? Does monopolist prefer to price-discriminate or to apply uniform pricing? Hand written solutions are strictly prohibitedA single-price monopolist faces an inverse demand function of: P(Q,B)=100−Q+B0.5, where Q is the quantity, P is the price, and B is the level of advertising. The marginal cost is a constant $10 per unit, the cost per unit of advertising is $1, and there are no fixed costs. Solve for the firm's profit-maximizing price, quantity, and level of advertising. Hint: the profit function must be maximized with respect to two choice variables (Q and B). The profit-maximizing quantity is -------? units. (round your answer to two decimal places) The profit-maximizing level of advertising is----------? units. (round your answer to two decimal places) The profit-maximizing price is-----? (round your answer to two decimal places)
- Suppose Medic Inc. has a patent for a new pill called Relieve, which alleviates Restless Leg Syndrome (RLS) and is approved to sell its products in two separate markets – USA and Canada. The inverse demand function in USA is given by PU = 24 - QU and the inverse demand function in Canada is given by PC = 12 - 0.5QC. Therefore the total revenue function for USA is given by TRU = 24QU - QU2 and the total revenue function for Canada is given by TRC = 12QC - 0.5QC2 . Relive is sold in strip of 10 pills and the marginal cost of producing each strip is $6.00. PU = Price in USA in US dollars; PC = Price in Canada in US dollars; QU = Quantity sold in USA; QC = Quantity sold in Canada. What will be the profit from the US market? a. $72.00 b. $45.00 c. $81.00 d. $0.00The supply chain for Pappy Van Winkle bourbon is characterized by a monopolist upstream producer and a competitive downstream retail sector. Final consumers’ demand for Pappy Van Winkle bourbon is given as: P=140-2Q, where Q is the number of bottles that are purchased each day. The marginal cost of production (i.e., performing the manufacturing function) can be written as: MCM=30+2Q, and the marginal cost of performing the retail function is MCA=20. Suppose that the two firms are not vertically integrated. Construct the final consumers’ demand curve.Consider a monopolist who sells its product in two distinct markets (and therefore can charge differentprices in these different markets). By the way, charging observably different group different prices is called3rd-degree price discrimination. The cost function is C(Q1 + Q2) = 0.25[Q1 + Q2]^2The inverse demand curves for these markets are p1(Q1) = 200 – Q1 for market 1 and p2(Q2) = 300 – Q2 formarket 2, where Q1 is the quantity sold in market 1 and Q2 is the quantity sold in market 2. At some pointbelow, you may wish to use the marginal cost function, which is MC(Q1 + Q2) = 0.5[Q1 + Q2]. a) State this 3rd-degree price discriminating monopolist’s maximization problem, using the particulars ofthis problem. Think carefully about what this monopolist is choosing and what it is trying to maximize. b) State two equations that an (interior) solution will satisfy. c) Solve for the optimal quantity to sell in each market. d) Solve for the price to charge in each market. e) Compute the…
- Consider a monopolist who sells its product in two distinct markets (and therefore can charge differentprices in these different markets). By the way, charging observably different group different prices is called3rd-degree price discrimination. The cost function is C(Q1 + Q2) = 0.25[Q1 + Q2]^2The inverse demand curves for these markets are p1(Q1) = 200 – Q1 for market 1 and p2(Q2) = 300 – Q2 formarket 2, where Q1 is the quantity sold in market 1 and Q2 is the quantity sold in market 2. At some pointbelow, you may wish to use the marginal cost function, which is MC(Q1 + Q2) = 0.5[Q1 + Q2]. a) State this 3rd-degree price discriminating monopolist’s maximization problem, using the particulars ofthis problem. Think carefully about what this monopolist is choosing and what it is trying to maximize. b) State two equations that an (interior) solution will satisfy. c) Solve for the optimal quantity to sell in each market. d) Solve for the price to charge in each market. e) Compute the…Suppose a discriminating monopolist is selling a product in four separate markets in which demand functions are: Q1 = 450 – P1; Q2 = 200 – 0.5 P2; Q3 = 150 – 0.25P3 and Q4 = 80 – 0.4P4 Cost function is TC = 95,000 – 100Q. a. As an economic adviser, determine the Prices to be charged in the three markets and amount of output to be sold in each market so that total profits can be maximized. b.Calculate the total profit to be made from the strategy of price discrimination and clearly explain how this strategy has aided this monopolist.A monopolist faces two competitive buyers with their individual demands as q1(p)=1200-2p and q2(p)=800-2p separately. Suppose it produces with the constant function CQ=500+200Q . If the monopoly offers the two buyers with same two-part tariff schedule, find its optimal menu of the two-part tariff.
- For price discriminating monopolist, the inverse demand functions for two markets are given as follows: ?1 = 16 − ?1 ?2 = 9 − ?2 Where: P1 is the price in sub-market 1 P2 is the price in sub-market 2 Q1 is quantity demanded in sub-market 1 Q2 is quantity demanded in sub-market 2 Using the above information, calculate the profit maximizing outputs and prices in each of the submarket when the industry’s marginal cost equals 10 units.Suppose a pure monopolist is faced with the demand schedule that follows and the same cost data as the competitive producer discussed in question 3 at the end of Chapter 7 . Calculate the missing total-revenue and marginal-revenue amounts, and determine the profit-maximizing price and profit-earning output for this monopolist. What is the monopolist’s profit? Verify your answer graphically and by comparing total revenue and total cost.The demand function for a monopolist is given by: P1 = 1,250 – 3.5Q and the cost function is given by C(Q) = 1,200 +1.5Q + 0.8Q2. This firm, Otsuka, is a pharmaceutical holding a patent on a depression treatment, Rexulti. However, the patent expired, and a generic treatment is offered in the market. Now, the new market price is P=$400. What is optimal Q given the new market price?