Suppose that the demand is given by P(Q) = 4 - Q and that the total cost is C = 2Q. a) Find the monopolist optimal price and quantity. b) Calculate consumers' surplus and the monopolist's profit. c) Suppose the market is perfectly competitive. What are the equilibrium price anc quantity?
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Part D E
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- Perfect Competition MC - Marginal Cost MR - Marginal Revenue ATC - Average Total Cost Refer to the figure above. If this firm is producing the profit-maximizing quantity and selling it at the profit-maximizing price, then the firm will set its price at ____ and produce ____ units. $4; 40 $6; 40 $6; 55 $6; 30Perfect Competition MC - Marginal Cost MR - Marginal Revenue ATC - Average Total Cost Refer to the figure above. If this firm is producing the profit-maximizing quantity and selling it at the profit-maximizing price, the firm's profit will be: $240 $160 $80 $60Perfect Competition MC - Marginal Cost MR - Marginal Revenue ATC - Average Total Cost Refer to the figure above. If this firm is producing the profit-maximizing quantity and selling it at the profit-maximizing price, the firm's total revenue will be: $240 $90 $60 $180
- DuopolyMarket for mechanical pencils can be described by the following demand schedule:Price | Number of pencils demanded$6 | 80$5 | 200$4 | 320$3 | 440$2 | 560$1 | 680$0 | 800The fixed cost is $340, while the variable cost is $0.50.a) For each price, find the total revenue, the total cost, and the profit.b) If the market was under perfect competition, what would be the price and the quantity ofpencils traded in the long run? Why?c) If there was only one seller on the market, what would be the price and the quantity ofpencils traded? Why?DuopolyMarket for mechanical pencils can be described by the following demand schedule:Price | Number of pencils demanded$6 | 80$5 | 200$4 | 320$3 | 440$2 | 560$1 | 680$0 | 800The fixed cost is $340, while the variable cost is $0.50.a) For each price, find the total revenue, the total cost, and the profit.b) If the market was under perfect competition, what would be the price and the quantity ofpencils traded in the long run? Why?c) If there was only one seller on the market, what would be the price and the quantity ofpencils traded? Why?d) If there were two firms on the market and they agreed to cooperate, how much would eachfirm need to produce? Follow the procedure outlined in the lecture and show that the otherfirm would prefer to deviate from the agreement.e) When the firms deviate from the agreement, there is a new optimal level of output. Showwhether the firms have an incentive to deviate from that level?f) If there were two firms on the market, what would be the price and the…Examine the relationship between Marginal cost and average cost for firm in the short run. Why the Monopoly firm is considered inefficient compare to perfect competition? Write short notes on a) Normal profit for perfectly competitive firm b) Economic loss for perfectly competitive firm. Note: Show Graph Using Ms word
- Maggie is one firm of many in the market for toothpaste, which is in long-run equilibrium. 1,a. Draw a diagram showing Maggie’s demand curve, marginal-revenue curve, average total cost curve, and marginal-cost curve. Label Sparkle’s profit-maximizing output and price. b. What is Maggie’s profit? Explain. c. On your diagram, show the consumer surplus derived from the purchase of Maggie toothpaste. Also show the deadweight loss relative to the efficient level of output. d. If the government forced Maggie to produce the efficient level of output, what would happen to the firm? What would happen to Maggie’s customers?Consider the following short-run data for a perfect competitor. Use the data to answer the following questions. Justify your answers and calculations. Quantity Demanded Price TC TVC MC 0 22 150 - 1 20 2 15 3 22 4 34 5 54 6 78 d) What is the profit maximizing level of output for this producer? e) Calculate profits or losses at all levels of output.A monopoly might form if which of the following conditions of perfect competition were violated? Question 24Answer a. Many consumers b. Fully informed consumers c. Free entry and exit d. Firms produce identical products
- Use the data below to answer the questions: A. Calculate total revenue at X. B. Calculate marginal revenue at Y. C. Calculate marginal cost at Z.Assume that the firm in the short run is earning super normal profit. Explain what will happen to these profits in long run for the following markets a) Monopolistic competition b) monopolyBasti’s Coffee operates in a competitive market. The short run price in the coffee market is equal toBasti’s Coffee average variable cost.a. Using two correctly labeled graphs show the coffee market side by side with Basti’s Coffee. Clearlyindicate which graph represents the market and which represents Basti’s Coffee. In your graph identify:i. price and quantity in the coffee market ii. price and quantity for Basti’s Coffee iii. The area of economic profit or loss for Basti’s Coffeeb. In a new set of graphs for both the market and Basti’s Coffee, show the long run adjustments in eachof the following:i. price and quantity in the coffee market ii. price and quantity for Basti’s Coffee