a)
To describe: Profits are maximized are to be shown for a downward sloping linear demand curve
a)
Answer to Problem 11.6P
The level of output in market is 60.
Explanation of Solution
In market of
P is the price
Q is the output demand
MC is the marginal cost
So, equalization of the marginal cost in each market is,
So, the level of output in market 1 is 50.
In market-2, the quantity would be,
The level of output is 60
Introduction:
Monopoly competition occurs when many companies offer similar but not the same product in an industry.Companies in competition with monopolies usually try to differentiate their product to obtain market returns.
b)
To calcute: Total profit.
b)
Answer to Problem 11.6P
Total profit is equal to $825.
Explanation of Solution
In case of monopolist maintains separation in the market, then profit maximizing price would be set as corresponding following equality,
Here, MR = Marginal Revenue
MC= Marginal Cost
Now to find out the profit maximizing output and the price in market-1,
So, the profit maximizing quantity in market is 25
Now to calculate the price charged in market-1 as,
So, the maximizing price is $20 in market 1
Now to find out the profit maximizing output and the price market 2,
So, the profit maximizing quantity in market-2 is 30
Now to calculate the price charged in market-2 as,
So, the maximizing price is $20 in market 2
Now, total profit is calculated as,
Therefore total profit is equal to $825
Introduction:
Monopoly competition occurs when many companies offer similar but not the same product in an industry.Companiesin competition with monopolies usually try to differentiate their product to obtain market returns.
c)
To describe: The new profit level of the monopolist.
c)
Answer to Problem 11.6P
The total profit is
Explanation of Solution
As the monopolist maintains the separation in the market, the profit maximizing price would be, set as,
Here, MR = Marginal Revenue
MC= Marginal Cost
Now to find out the profit maximizing output and the price in market-2,
So, the profit maximizing quantity in market is 32
Now to calculate the price charged in market-2 as,
So, the maximizing price is $19 in market 2
Now, total profit is calculated as,
Therefore, the total profit is $812
Now to find out the profit maximizing output and the price market 2,
So, the profit maximizing quantity in market-1 is
Now to calculate the price charged in market-2 as,
So, the maximizing price is
Now to find out the profit maximizing output and the price in market-2,
So, the profit maximizing quantity in market is 35
Now to calculate the price charged in market-1 as,
So, the maximizing price is
Now, total profit is calculated as,
Therefore, the total profit is
Introduction:
Monopoly competition occurs when many companies offer similar but not the same product in an industry.Companies in competition with monopolies usually try to differentiate their product to obtain market returns.
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Chapter 11 Solutions
Intermediate Microeconomics and Its Application, 12th edition with CD-ROM (Exclude Access Card)
- Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning