Scenario 15-2 A monopoly firm maximizes its profit by producing 500 units output (so Q = 500). At that level of output, its marginal revenue is $30, its average revenue is $40, and its average total cost is $34. Refer to Scenario 15-2. What is the firm's profit-maximizing price? Select one: O a. $30 cross out O b. between $34 and $40 cross out O c $40 cross out

Scenario 15-2 A monopoly firm maximizes its profit by producing 500 units output (so Q = 500). At that level of output, its marginal revenue is $30, its average revenue is $40, and its average total cost is $34. Refer to Scenario 15-2. What is the firm's profit-maximizing price? Select one: O a. $30 cross out O b. between $34 and $40 cross out O c $40 cross out

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter9: Monopoly

Section: Chapter Questions

Problem 11SQ

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Question 27 Consider a monopoly market in which the market demand curve is given by P = 240 – 2Q, the marginal revenue curve is MR = 240 – 4Q, the marginal cost curve is MC = 2Q, and there are zero fixed costs. Suppose the government intervenes and turns the market into a competitive market, and all the firms in the market have the same marginal cost curve as the monopolist, MC = 2Q, and zero fixed costs. How much is the resulting gain in total surplus? 300 800 400 600
Consider a monopoly market in which the market demand curve is given by P = 240 – 2Q, the marginal revenue curve is MR = 240 – 4Q, the marginal cost curve is MC = 2Q, and there are zero fixed costs. Suppose the government intervenes and turns the market into a competitive market, and all the firms in the market have the same marginal cost curve as the monopolist, MC = 2Q, and zero fixed costs. How much is the resulting gain in total surplus?[12:17]800 600 300 400
One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where Question 7 options: a) marginal cost equals price, whereas a monopolist produces where price exceeds marginal cost b) marginal cost equals price, whereas a monopolist produces where cost exceeds price c) price exceeds marginal cost, whereas a monopolist produces where marginal cost equals price d) marginal cost exceeds price, while a monopolist produces where marginal cost equals price
a) With the aid of a diagram, explain how an ordinary monopoly that sells its output at a uniform price, having a total cost function TC=c•Q (where c,0), could earn total revenue that equal the entire area under the market demand curve, leaving customers with no consumer surplus. b) If an ordinary monopoly firm could indeed capture the entire consumer surplus, with the aid of a diagram, indicate graphically the firm’s output and the uniform price at which the firm would sell its product in order to maximize profit.
Indicate whether the statement is TRUE, FALSE, or UNCERTAIN and explain why. 1. A firm is a monopolist in the market for good X. The government has perfect information about the marginal and average cost curves of this firm and also has perfect information about the demand curve for good X. Claim: The economy will reach an efficient outcome if the government sets a price ceiling that makes the price equal to the marginal cost, evaluated at the quantity where the marginal cost intersects the demand curve.
3. The inverse market demand is P=100 – 2/3Q. The firms have cost functions TC1 = 15 + 3q1+ q1² TC2 = 20 + q2 + 2q2² Q = q1 +q2 a. Assume there is a multiplant monopoly and TC1 and TC2 represents the cost of production in each plant. How much quantity should each plant produce? b. Find the market price. c. Assume there is a multiplant monopoly. Would it make sense for the firm to close one of the plants? d. Does your answer change if TC2 = 20 + q2 + 2q2² changes to TC2 = 1000 + q2 + 2q² ? e. Explain your answer from the prior question- did your production change or remain the same?
A monopoly producer of drugs has a constant marginal cost of MC=8 and sells its product in two separated markets. The demand functions for the two separated markets are:• Market 1: P1=24-Q1 and • Market 2: P2=12-0.5Q2 i. Determine the firm’s profit-maximizing quantity and price in each market. Calculate the size of deadweight loss in each market and the total welfare loss caused by the monopoly. Illustrate the two separated market equilibria including the sizes of welfare loss with two monopoly market diagrams. ii. Calculate the size of monopoly profit or loss for each market. Based on the information provided, analyse the most critical reason that causes the monopoly to set prices differently in these two markets. iii. A new law was enacted that prohibits the monopoly from charging different prices in separated markets. With this new single-price law the monopoly is restricted to set only one single price no matter how many separated markets in which it monopolies. The board of…
A monopoly producer of drugs has a constant marginal cost of MC=8 and sells its product in two separated markets. The demand functions for the two separated markets are:• Market 1: P1=24-Q1 and • Market 2: P2=12-0.5Q2 i. Determine the firm’s profit-maximizing quantity and price in each market. Calculate the size of deadweight loss in each market and the total welfare loss caused by the monopoly. Illustrate the two separated market equilibria including the sizes of welfare loss with two monopoly market diagrams. ii. Calculate the size of monopoly profit or loss for each market. Based on the information provided, analyse the most critical reason that causes the monopoly to set prices differently in these two markets. iii. A new law was enacted that prohibits the monopoly from charging different prices in separated markets. With this new single-price law the monopoly is restricted to set only one single price no matter how many separated markets in which it monopolies. The board of…
A monopoly producer of drugs has a constant marginal cost of MC=8 and sells its product in two separated markets. The demand functions for the two separated markets are:• Market 1: P1=24-Q1 and• Market 2: P2=12-0.5Q2i. Determine the firm’s profit-maximizing quantity and price in each market. Calculate the size of deadweight loss in each market and the total welfare loss caused by the monopoly. Illustrate the two separated market equilibria including the sizes of welfare loss with two monopoly market diagrams. ii. Calculate the size of monopoly profit or loss for each market. Based on the information provided, analyse the most critical reason that causes the monopoly to set prices differently in these two markets.iii. A new law was enacted that prohibits the monopoly from charging different prices in separated markets. With this new single-price law the monopoly is restricted to set only one single price no matter how many separated markets in which it monopolies. The board of directors…
Consider a monopoly that faces the demand curve P = 20 − Q, and has the marginal cost curve MC = 2. a) Use the demand curve to find the equation of the marginal revenue curve. b) Find the profit-maximizing price and quantity for this monopoly if the monopoly uses uniform pricing. What is the producer surplus? c) Now, suppose the monopoly wants to increase profits using block pricing. The total cost the monopoly incurs is T C = 2Q. Find the optimal quantities, Q1 and Q2, and their corresponding optimal prices, P1 and P2 that maximize profits using a two-block pricing scheme. What is the new producer surplus? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
A monopoly faces a continuum of consumers who are distributed uniformly on the unit interval [0,1]. The total mass of consumers is 1. Each consumer is interested in buying at most one unit. Consumers differ in the way they perceive the monopoly’s product. Assuming for simplicity that the monopoly is located at point 0, the utility of a consumer who is located at some point between 0 and 1 if he buys from the monopoly is , whereis the monopoly’s price, is the direct utility from consumption, and is the transportation cost. If a consumer does not buy, his utility is 0. The marginal cost of production is 0. a) What is the market demand for the monopoly? (Hint: Compute the marginal consumer who is indifferent between “buy” and “not buy”. Also, be careful about whether the marginal consumer is bounded by the endpoints 0 and 1.) b) Now suppose the market is duopoly. Firm A is located at point 0 and Firm B at point 1. A consumer located at point (between 0 and 1) gets utility when buying…
A monopoly faces a continuum of consumers who are distributed uniformly on the unit interval [0,1]. The total mass of consumers is 1. Each consumer is interested in buying at most one unit. Consumers differ in the way they perceive the monopoly’s product. Assuming for simplicity that the monopoly is located at point 0, the utility of a consumer who is located at some point between 0 and 1 if he buys from the monopoly is , whereis the monopoly’s price, is the direct utility from consumption, and is the transportation cost. If a consumer does not buy, his utility is 0. The marginal cost of production is 0. a) What is the market demand for the monopoly? (Hint: Compute the marginal consumer who is indifferent between “buy” and “not buy”. Also, be careful about whether the marginal consumer is bounded by the endpoints 0 and 1.) b) Now suppose the market is duopoly. Firm A is located at point 0 and Firm B at point 1. A consumer located at point (between 0 and 1) gets utility when buying…