You are the manager of a monopoly. Your analytics department estimates that a typical consumer's inverse demand function for you firm's product is P= 150 -40Q, and your cost function is qq = 70Q. %3D
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- Inverse elasticity rule Use the first-order condition (Equation 15.2 ) for a Cournot firm to show that the usual inverse elasticity rule from Chapter 11 holds under Cournot competition (where the elasticity is associated with an individual firm's residual demand, the demand left after all rivals sell their output on the market). Manipulate Equation 15.2 in a different way to obtain an equivalent version of the inverse elasticity rule: pMCp=sieQ,p , where si=qi/Q is firm i's market share and eQp is the elasticity of market demand. Compare this version of the inverse elasticity rule with that for a monopolist from the previous chapter.You are the manager of a monopoly, and your analysts have estimated your demand and cost functions as P = 500 − 2Q and C(Q) = 2,500 + 2Q2, respectively. d. What price–quantity combination maximizes revenue? Instructions: Round your response to the nearest penny (two decimal places). Price: $ Quantity: units e. Calculate the maximum revenues. Instructions: Round your response to the nearest penny (two decimal places). $ f. Is demand elastic, inelastic, or unit elastic at the revenue-maximizing price–quantity combination? multiple choice 2 Inelastic Unit elastic ElasticYou are the manager of a monopoly. Your analytics department estimates that a typical consumer's inverse demand function for your firm's product is P = 350-20Q and your cost function is C(Q) = 70Q. a. Determine the optimal two-part pricing strategy (optimal meaning most profitable) Per Unit Fee:$___ (do not round intermediate numbers, include two decimals) Fixed Fee $____ (do not round intermediate numbers, include two decimals) b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price? PLEASE SHOW ALL WORK AND CALCULATIONS
- You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Analysts at your firm have determined that group 1’s elasticity of demand is −3, while group 2’s is −2. Your marginal cost of producing the product is $70.a. Determine your optimal markups and prices under third-degree price discrimination.Markup for group 1: Price for group 1: $ Markup for group 2: Price for group 2: $ b. Which of the following are necessary conditions for third-degree price discrimination to enhance profits. check all that apply At least one group has elasticity of demand less than one in absolute value. We are able to prevent resale between the groups. At least one group has elasticity of demand greater than 1 in absolute value. There are two different groups with different (and identifiable) elasticities of demand.You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Analysts at your firm have determined that group 1’s elasticity of demand is −3, while group 2’s is −5. Your marginal cost of producing the product is $40. a. Determine your optimal markups and prices under third-degree price discrimination. Markup for group 1: Price for group 1: Markup for group 2: Price for group 2: $ b. Which of the following are necessary conditions for third-degree price discrimination to enhance profits.You are the manager of a monopoly, and your analysts have estimated your demand and cost functions as P = 500 − 2Q and C(Q) = 2,500 + 2Q2, respectively. a. What price–quantity combination maximizes your firm’s profits? Instructions: Round your response to the nearest penny (two decimal places). Price: $ Quantity: units b. Calculate the maximum profits. Instructions: Round your response to the nearest penny (two decimal places). $ c. Is demand elastic, inelastic, or unit elastic at the profit-maximizing price–quantity combination? multiple choice 1 Elastic Inelastic Unit elastic
- You are the manager of a monopoly. Your analytics department estimates that a typical consumer’s inverse demand function for your firm’s product is P = 200 − 20Q, and your cost function is C(Q) = 80Q.a. Determine the optimal two-part pricing strategy. Per-unit fee: $ Fixed fee: $ b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price?You are the manager of a monopoly, and your analysts have estimated your demand and cost functions as P = 200 − 2Q and C(Q) = 1,000 + 3Q2, respectively. a. What price–quantity combination maximizes your firm’s profits? Instructions: Round your response to the nearest penny (two decimal places). Price: $ Quantity: units b. Calculate the maximum profits. Instructions: Round your response to the nearest penny (two decimal places). $ c. Is demand elastic, inelastic, or unit elastic at the profit-maximizing price–quantity combination? multiple choice 1 Elastic Unit elastic Inelastic d. What price–quantity combination maximizes revenue? Instructions: Round your response to the nearest penny (two decimal places). Price: $ Quantity: units e. Calculate the maximum revenues. Instructions: Round your response to the nearest penny (two decimal places). $ f. Is demand elastic, inelastic, or unit elastic at the revenue-maximizing price–quantity…You are the manager of a monopoly, and your analysts have estimated your demand and cost functions as P = 600 − 3Q and C(Q) = 2,000 + 2Q2, respectively. a. What price–quantity combination maximizes your firm’s profits? Instructions: Round your response to the nearest penny (two decimal places). Price: $ Quantity: units b. Calculate the maximum profits. Instructions: Round your response to the nearest penny (two decimal places). $ c. Is demand elastic, inelastic, or unit elastic at the profit-maximizing price–quantity combination? multiple choice 1 Unit elastic Inelastic Elastic d. What price–quantity combination maximizes revenue? Instructions: Round your response to the nearest penny (two decimal places). Price: $ Quantity: units e. Calculate the maximum revenues. Instructions: Round your response to the nearest penny (two decimal places). $ f. Is demand elastic, inelastic, or unit elastic at the revenue-maximizing price–quantity…
- You are the manager of a monopoly, and your analysts have estimated your demand and cost functions as P = 300-2Q and C(Q) = 1,500 + 2Q2, respectively. a. What price-quantity combination maximizes your firm's profits? Instructions: Round your response to the nearest penny (two decimal places). Price: $ Quantity: units b. Calculate the maximum profits. Instructions: Round your response to the nearest penny (two decimal places). $ c. Is demand elastic, inelastic, or unit elastic at the profit - maximizing price-quantity combination? multiple choice 1 Unit elastic Elastic Inelastic d. What price- quantity combination maximizes revenue? Instructions: Round your response to the nearest penny (two decimal places). Price: $ Quantity: units e. Calculate the maximum revenues. Instructions: Round your response to the nearest penny (two decimal places). $ f. Is demand elastic, inelastic, or unit elastic at the revenue - maximizing price-quantity combination? multiple choice 2 Unit elastic Elastic…You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Analysts at your firm have determined that group 1’s elasticity of demand is −6, while group 2’s is −2. Your marginal cost of producing the product is $80. a. Determine your optimal markups and prices under third-degree price discrimination. markup for group 1: price for group 1: markup for group 2: price for group 2:You are the manager of a monopoly, and your analysts have estimated your demand and cost functions as P = 300 − 3Q and C(Q) = 1,500 + 2Q2, respectively. a. What price-quantity combination maximizes your firm’s profits? Price: Quantity: b. Calculate the maximum profits. $ c. Is demand elastic, inelastic unit elastic Elastic d. What price-quantity combination maximizes revenue? Price: Quantity: e. Calculate the maximum revenues. $ f. Is demand elastic, inelastic, or unit elastic at the revenue-maximizing price-quantity combination? multiple choice Elastic Unit elastic Inelastic
