A monopolist is facing the following demand schedule P=24-3Q. That is, Q=0 implies P=24, then Q=1...

A monopolist is facing the following demand schedule P=24-3Q. That is, Q=0 implies P=24, then Q=1 implies P=21, and Q=2 implies P=18, and so one. Fixed costs will be neglected in this analysis. The marginal cost is constant and equal to 6 for every unit produced. How do I find the quantity produced and the amount of maximum profits? How do I find the Price and quantity to yield the efficient solution? How do I find what happens if a new competitor enters the market and the marginal cost the new competitor is constant and always equal to 5? I mean, in this latter case could you tell us the Nash equilibrium?

Expert Solution

Rahul Sunny answered 10 months ago

A monopolist is facing the following demand curve P = 50 − 5Q. The monopolist has...

A monopolist is facing the following demand curve P = 50 − 5Q. The monopolist has the following marginal cost MC = 10. The monopolist knows exactly the willingness to pay of each individual consumer and charge consumers individual prices. Calculate the monopolist’s profit (assuming FC=0). (a) π=40 (b) π=80 (c) π = 160 (d) None of the above.

3) (Symmetric Cournot) Consider a duopoly facing market demand p(Q) = 90 – 3Q, and assume...

3) (Symmetric Cournot) Consider a duopoly facing market demand p(Q) = 90 – 3Q, and assume each firm has cost function C(q) = 18q. For parts a-d, suppose these two firms engage in Cournot competition – that is, they simultaneously choose a quantity to produce, and then the price adjusts so that markets clear. [Recall that a firm’s Cournot best response function is the quantity that this firm will choose to produce in order to maximize its own profit, for...

Suppose that the market demand is: P = 24 – 3Q, where P is price and...

Suppose that the market demand is: P = 24 – 3Q, where P is price and Q is quantity demanded, and marginal revenue is: MR = 24 – 6Q. The marginal cost is: MC = 6 and total fixed cost is 0. a. If the market structure is monopoly, determine the profit maximizing price and output for this monopolist and calculate its economic profit or loss at the profit maximizing output. b. If the market structure is perfect competition, determine...

Monopoly with linear inverse demand. Consider a monopolist facing a linear inverse demand curve p(q)= a-...

Monopoly with linear inverse demand. Consider a monopolist facing a linear inverse demand curve p(q)= a- bq, and cost function C(q)= F + cq, where F denotes its fixed costs and c represents the monopolist's (constant) magical cost a>c 1. Graph demand, marginal revenue and marginal cost. Label your graph carefully, including intercepts 2. Solve the profit maximizing output q^m. To do this, first write down the expression for MR=MC and solve for the optimal quantity. Next find the price...

A monopolist faces the following demand curve: P = 400 - 3Q, its total cost is...

A monopolist faces the following demand curve: P = 400 - 3Q, its total cost is given by: TC = 3000 + Q2 and its marginal cost is given by: MC = 2Q. (a) If it is a single price monopolist, what is its profit maximizing price and quantity? Show your work. How much is the profit? How much are consumer surplus and producer surplus? (b) Suppose it is a first degree price discriminator instead of a single price monopolist....

A monopolist faces a demand of P = -3Q + 400. The monopolist’s marginal cost is...

A monopolist faces a demand of P = -3Q + 400. The monopolist’s marginal cost is MC = 2Q + 80. The total cost for the monopolist is TC = Q2 + 80Q + 6000 a) Find the profit-maximizing quantity, price, and profit of the monopolist. b) A regulatory agency tries to force the monopoly to produce the same quantity as a competitive firm. Show what this price and quantity is and why the firm will eventually shut down rather...

Consider a monopolist facing linear demand P(Q) = 16 – Q. Find the monopolist’s profit-maximizing choice...

Consider a monopolist facing linear demand P(Q) = 16 – Q. Find the monopolist’s profit-maximizing choice of price and quantity if the total cost function is C(Q) = 8Q. Find the monopolist’s profit-maximizing choice of price and quantity if instead C(Q) = 2Q2. Note that this cost function yields exactly the same total cost as the original cost function C(Q) = 8Q for the monopolist’s optimal quantity in 2.1. Explain why the monopolist’s optimum quantity, however, is not the same...

Suppose a monopolist facing a downward sloping inverse demand curve p(q) sets prices and quantity (p...

Suppose a monopolist facing a downward sloping inverse demand curve p(q) sets prices and quantity (p ∗ , q∗ ). Show that the area between the demand curve and the marginal revenue curve equals the consumer surplus.

A natural monopolist faces the following demand curve: P = 602 - 3Q, its total cost...

A natural monopolist faces the following demand curve: P = 602 - 3Q, its total cost is given by: TC = 5700 + 2Q (marginal cost is the slope of total cost). (a) If the government regulates the monopolist to charge a socially optimal price, what price will it charge and how many units will it sell? How much are the profit, consumer surplus and producer surplus? (1+2+2+2+1 = 8 points) (b) If it is not a regulated monopolist, what...

Assume a monopolist faces a market demand curve P = 190 - 3Q and has the...

Assume a monopolist faces a market demand curve P = 190 - 3Q and has the short-run total cost function C = 540 + 10Q. What is the profit-maximizing level of output? What are profits? Graph the marginal revenue, marginal cost, and demand curves, and show the area that represents deadweight loss on the graph. (Hint: derive the MR and MC functions and set MC=MR and solve). In Question 3 above, what would price and output be if the firm...

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