Microeconomics (Book Only)
12th Edition
ISBN: 9781285738307
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 10, Problem 2QP
To determine
The price making power of the
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Since the monopolist is a “price maker” and sets the price of his output, he will always charge the highest price. True or False? Why?
There is a monopolist in a market for a particular type of consumer goods. It is costly to create new types of products (brands) in this market, but consumers have different taste and thus some will prefer the new brand. Will the monopolist create too few brands or too many? Explain.
The monopolist faces the following demand curve:
Price
$20
Quantity
15
$19.50
16
$19
17
$18.50
18
$18
19
$17.50
20
$17
21
$16.50
22
$16
23
If the monopolist has total fixed costs of $40 and a constant marginal cost of $10, how much profit can the firm earn at the profit-maximizing
level of output?
Chapter 10 Solutions
Microeconomics (Book Only)
Ch. 10.1 - Prob. 1STCh. 10.1 - Prob. 2STCh. 10.1 - Prob. 3STCh. 10.3 - Prob. 1STCh. 10.3 - Prob. 2STCh. 10.3 - Prob. 3STCh. 10.3 - Prob. 4STCh. 10.5 - Prob. 1STCh. 10.5 - Prob. 2STCh. 10.5 - Prob. 3ST
Ch. 10 - Prob. 1VQPCh. 10 - Prob. 2VQPCh. 10 - Prob. 3VQPCh. 10 - Prob. 4VQPCh. 10 - Prob. 5VQPCh. 10 - Prob. 1QPCh. 10 - Prob. 2QPCh. 10 - Prob. 3QPCh. 10 - Is there a deadweight loss if a firm produces the...Ch. 10 - Prob. 5QPCh. 10 - Prob. 6QPCh. 10 - Prob. 7QPCh. 10 - Prob. 8QPCh. 10 - Prob. 9QPCh. 10 - Prob. 10QPCh. 10 - Prob. 11QPCh. 10 - Prob. 12QPCh. 10 - Prob. 13QPCh. 10 - Prob. 14QPCh. 10 - Prob. 1WNGCh. 10 - Prob. 2WNGCh. 10 - Prob. 3WNGCh. 10 - Prob. 4WNGCh. 10 - Prob. 5WNGCh. 10 - Prob. 6WNG
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- If the quantity demanded at a price of $10 is 2,000 and the quantity demanded at a price of $8 is 2,400, what should a price-discriminating monopolist do to maximize profits?arrow_forwardIs a monopolist a price taker? Why or why not?arrow_forwardCreate graph that includes: Demand curve, marginal cost, and marginal revenue. Identify the profit-maximizing quantity and price for this monopolist. To do this you will need to determine marginal revenue at each level of output. Choose output that satisfies the monopolist’s profit maximizing condition of MR = MC. Does this firm earn a profit? How much profit if they do?arrow_forward
- Suppose a monopolist's profit-maximizing output is 400 units per week and that the firm sells its output at a price of $40 per unit. The firm has total costs of $8,000 per week. Assume the monopolist is maximizing its profit and earns $20 per unit from the sale of the last unit produced each week. Instructions: Enter your answers as a whole number. a. What are the firm's weekly economic profits? b. What is the firm's marginal cost? c. What is the firm's average total cost? Aarrow_forwardA monopolist has a cost function given by c(y) = y2 and faces a demand curve given by P(y) = 120 − y. a. What is his profit-maximizing level of output? What price will the monopolist charge? b. Suppose you put a lump sum tax of $100 on this monopolist. What would its output be? c. If you wanted to choose a price ceiling for this monopolist so as to maximize consumer plus producer surplus, what price ceiling should you choose? How much output will the monopolist produce at this price ceiling?arrow_forwardThe table shows the demand schedule of a monopolist. Calculate marginal revenue and fill in the revenue column in the table. Assume that output can only be sold in integer amounts (i.e., 11 unit, 22 units, etc.). Once you have filled in marginal revenue, identify the quantity produced by the monopolist in this market. Quantity Price Marginal Marginal Cost Revenue 1 $13 $3 MR1 2 $12 $4 MR2 3 $11 $5 MR3 4 $10 $6 MR4 $9 $7 MR5 6. $8 $8 MR6 How many units does the monopolist produce? Quantity:arrow_forward
- The table below shows a monopolist's demand curve and the cost information for the production of its good. If the monopolist is trying to maximize its profit what would it be? Quantity Price per Unit Total Cost 10 $100 $100 20 $80 $400 30 $60 $800 40 $40 $1,400 50 $20 $2,400 Question 40 options: a) $1,200 b) $1,000 c) $1,600 d) $1, 800arrow_forwardIf the price is greater than actual total cost, does the monopolist make a profit, loss, or break-even?arrow_forwardA monopoly sells good in the United States, where the elasticity of demand is -2, and in Japan, where the elasticity of demand is -5. Its marginal cost is $10. At what price does the monopoly sell its good in each country if resale is impossible?arrow_forward
- Fruity Apples is the monopolist in the market for apples. The following equations describe the demand, the marginal cost, and the total cost, where Q is in pounds and P is price per pound. Demand: P = 93 - Q Marginal cost: MC = 3 + 2Q Total cost: TC = 3Q+Q². What would the equilibrium price and quantity be if this market was perfectly competitive? P = $61 and Q = 32 pounds P = $30 and Q = 63 pounds P = $63 and Q = 30 pounds P = $32 and Q = 61 poundsarrow_forwardSuppose the following are true for a monopolist market: P = 450-20Q MR = 450-40Q MC = 65+ 10Q ATC= 65+5Q What is the profit maximizing Price and Quantity? P* = $ Q* = 94 How much profit did the monopolist earn? Profit = $arrow_forwardSuppose a monopolist could charge a different price to every customer based on how much he or she were willing and able to pay (versus charging the same price to all their customers). How would this affect the monopolist's profits? Why?arrow_forward
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