The accompanying figure shows the demand curve, marginal revenue curve, marginal cost eurve and average total cost curve for a monopolist. 30 28 26 24 22 20 18- 16 ATC 12 10 -MC 4 MR 2 3 6 9 10 Quantity (units/day! 1) This monopolist maximizes its profit by producing charging a price of 4 units per day and 18 per unit 2) The socially optimal level of output is 8 units per day. 3) At this monopolist s profit-maximizing level of output what is its economic profit or loss? The economie loss is $-72 at the profit maximizing level. 4) At his monopolist's socially optimal level of output, what is its economic profit or loss? The Economic loss is $-64 at the socially optimal level. 5) At this monopolist's profit-maximizing level of output what the deadweight loss to society! 14 of 118 words Focus 31 பொ/து *uu

The accompanying figure shows the demand curve, marginal revenue curve, marginal cost eurve and average total cost curve for a monopolist. 30 28 26 24 22 20 18- 16 ATC 12 10 -MC 4 MR 2 3 6 9 10 Quantity (units/day! 1) This monopolist maximizes its profit by producing charging a price of 4 units per day and 18 per unit 2) The socially optimal level of output is 8 units per day. 3) At this monopolist s profit-maximizing level of output what is its economic profit or loss? The economie loss is $-72 at the profit maximizing level. 4) At his monopolist's socially optimal level of output, what is its economic profit or loss? The Economic loss is $-64 at the socially optimal level. 5) At this monopolist's profit-maximizing level of output what the deadweight loss to society! 14 of 118 words Focus 31 பொ/து *uu

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter16: Government Regulation

Section: Chapter Questions

Problem 10E

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A monopolist faces a market demand curve given by: Q = 80 - p.Assume that the monopolist has a cost structure where total costs are described by: C(Q) = 0.25Q2 - 5Q + 1000.The monopoly will choose a price-quantity combination of (50 and 30) to maximize profit. The total profit is 425. Question 1: What output level would be socially optimal? What is the price at this output level, if all units are sold at the same price? What is the profit? What would the social welfare gain be from this output level compared to the outcome described above?Question 2: If government regulation forces the firm to set its price equal to its average cost of production, what will the output level be? What is the price at this output level, if all units are sold at the same price? What is the profit? What would the social welfare gain or loss be from this output level compared to the outcomes in (question 1) and where profit was 425, and price -quantaty combination (50 and 30)?
Continue with your analysis of the monopoly cable-television company with demand of Qd = 60 - P/2 (alternatively, you can write the demand equation as Qd = 60 – 0.5P) and MC = 0.5Q + 30. Explain how you’ve determined the socially optimal output level. How does the socially optimal output compare to the monopolist output in terms of individual CS, PS, and DWL (e.g., compare CSm and CSSOC, and so on)? How does the total surplus (sum of consumer and producer surpluses) compare between the two situations? (Narrative response; suggested length of four to eight sentences or one to two paragraphs. It might be useful to create a table to contrast the two settings.)
A monopolist faces a demand curve given by q = 32 − 0.5p. Its costs are given by 0.5q2 + 100. (a) What is the monopolist’s profit maximizing choice of output? At what price does it sell its product? (b) Draw a graph that illustrates the monopolist’s choices. (c) If this were a competitive market, what would be the equilibrium price and quan- tity? (d) If the monopolist were forced to sell its output at the price that would arise in the competitive market, would it still be able to make a profit?
Monopoly Equilibrium Suppose a firm operates as a monopoly in an unregulated market. The firm's total cost function for producing quantity, Q is given by the equation: TC 2000+200Q + Q^2. The market demand curve is given by the equation: Q = 220 0.5P. a. What is the firm's marginal cost curve? Show graphically. b. What is the firm's marginal revenue curve? Show graphically. c. Calculate the monopoly's profit maximizing price and quantity. Show graphically. d. What is the socially efficient price and quantity? Show graphically. e. When moving from the socially efficient price and quantity to the monopoly solution: a. How does consumer surplus change? b. How does producer surplus change? c. What is the social cost of the monopoly solution? f. Calculate the monopoly rents.
As the manager of a monopoly, you face potential government regulation. Your inverse demand is P=40-2Q and your costs are C (Q) =8Q. Determine the socially efficient price and output.
Suppose we have a monopolist with the following: D: Q=40-.5P C: TC=50+10Q What is the marginal cost? What is the revenue function? What is the marginal revenue? What is the profit function (as a function of Q)? What quantity maximizes the monopolists profit? What price will the product be sold at? What is the socially efficient quantity? What is the socially efficient price?
A monopolist faces a market demand curve given by: Q = 80 - pa) Assume that the monopolist has a cost structure where total costs are described by: C(Q) = 0.25Q2 - 5Q + 1000.What price-quantity combination will a profit maximising monopolist choose? What will profits be? b) What output level would be socially optimal? What is the price at this output level, if all units are sold at the same price? What is the profit? What would the social welfare gain be from this output level compared to the outcome in (a)?c) If government regulation forces the firm to set its price equal to its average cost of production, what will the output level be? What is the price at this output level, if all units are sold at the same price? What is the profit? What would the social welfare gain or loss be from this output level compared to the outcomes in (a) and (b)?
E4 How much extra profit does the monopolist earn when he increases the price from $12 to $18
What is the total social cost associated with the monopoly shown in Figure 1, assuming that the maximum amount is spent on a successful lobbying effort? Question options: a) $16.50 b) $4.50 c) $12 d) $7.50
A monopolist’s cost function yields constant average and marginal costs, with AC = MC = 5. The firm faces a market demand curve given by P = 29 – Q. Calculate the marginal revenue curve, MR, for the monopoly. Solve for the monopolist’s profit maximizing output and price and calculate the Lerner’s index and the profit of the monopolist. Show the profit maximizing decision of the monopolist and the profits earned diagrammatically. What would be the socially optimal output and price? (Hint: this would be the output and price if the industry were perfectly competitive. That is, the profit maximizing rule would be P =MC) Show diagrammatically the social cost of a monopoly. Calculate the social cost of monopoly.
A monopolist faces a market demand curve given by: Q = 80 - pAssume that the monopolist has a cost structure where total costs are described by: C(Q) = 0.25Q2 - 5Q + 1000.Question a: What output level would be socially optimal? What is the price at this output level, if all units are sold at the same price? What is the profit? Question b: If government regulation forces the firm to set its price equal to its average cost of production, what will the output level be? What is the price at this output level, if all units are sold at the same price? What is the profit? What would the social welfare gain or loss be from this output level compared to the outcomes in (a)?
A monopolist’s cost function yields constant average and marginal costs, with AC = MC = 5. Thefirm faces a market demand curve given by P = 29 – Q. 1. Calculate the marginal revenue curve, MR, for the monopoly. 2. Solve for the monopolist’s profit maximizing output and price and calculate the Lerner’s index and the profit of the monopolist. Show the profit maximizing decision of the monopolist and the profits earned diagrammatically. 3. What would be the socially optimal output and price? (Hint: this would be the output and price if the industry were perfectly competitive. That is, the profit maximizing rule would be P =MC) 4. Show diagrammatically the social cost of a monopoly. and Calculate the social cost of monopoly