Question
In: Economics
. A single-price monopolist has the schedules given in the table below. Quantity (units) Price (MYR)...
. A single-price monopolist has the schedules given in the table below.
|
Quantity (units) |
Price (MYR) |
Marginal revenue (MYR) |
Marginal cost (MYR) |
|
1 |
22 |
20 |
6 |
|
2 |
20 |
16 |
8 |
|
3 |
18 |
12 |
12 |
|
4 |
16 |
8 |
18 |
|
5 |
14 |
4 |
28 |
a. Determine the profit-maximizing level of output, price as well as the amount of profit or loss at this level. Clarify how you obtain the answer.
…………………………………………………………………………………………………..
…………………………………………………………………………………………………..
…………………………………………………………………………………………………..
b. Compare between the perfect competition and monopoly market structure.
…………………………………………………………………………………………………..
…………………………………………………………………………………………………..
…………………………………………………………………………………………………..
Solutions
Expert Solution
The given table can be expanded to include Total Revenue and Total Cost.
|
Quantity (units) |
Price (MYR) |
Marginal revenue (MYR) |
Total Revenue |
Marginal cost (MYR) |
Total Cost |
|
1 |
22 |
20 |
20 |
6 |
6 |
|
2 |
20 |
16 |
36 |
8 |
14 |
|
3 |
18 |
12 |
48 |
12 |
26 |
|
4 |
16 |
8 |
56 |
18 |
44 |
|
5 |
14 |
4 |
60 |
28 |
72 |
TR is found by the summation of MR at each level of output; TC is found by the summation of MC at each level of output
---
a) Profit maximizing level of output is where MR = MC
From the table, this is where Q = 3 units and P = MYR 18
At this level, Profits = TR - TC
Profit = 48 - 26 = MYR 22
---
b) The main points of difference are:
| Perfect Competition | Monopoly | |
| Number of buyers and sellers | Large number of buyers and sellers | Many buyers, and a single seller |
| Price determination | Price decided by market, everyone is a price taker | Seller is the price maker |
| Entry and exit | Free entry and free exit | High entry barriers, costly to exit |
| Economic Profits | Not possible | Possible till the firm has market power |
| P and MC | P = MC | P > MC |
| Efficiency | Outcome is efficient | Outcome is inefficient |
| MR | Horizontal | Downward sloping |
Perfect competition is an efficient market, because it leads to the society's maximum welfare. This doesn't happen in monopoly. The monopoly firm can charge any price, and thus offer a lower quantity for sale. The monopoly firm is able to make economic profits, and it also attempts to raise the entry barriers.
Rahul Sunny answered 8 months agoRelated Solutions
3. A single-price monopolist has the schedules given in the table below. Quantity (units) Price (MYR)...
3. A single-price monopolist has the schedules given in the
table below.
Quantity
(units)
Price
(MYR)
Marginal revenue
(MYR)
Marginal cost
(MYR)
1
22
20
6
2
20
16
8
3
18
12
12
4
16
8
18
5
14
4
28
a. Determine the profit-maximizing level of output, price as
well as the amount of profit or loss at this level. Clarify how you
obtain the answer.
…………………………………………………………………………………………………..
…………………………………………………………………………………………………..
…………………………………………………………………………………………………..
b. Compare between the perfect competition and monopoly market...
Table refer to a monopolist demand and cost schedules. Quantity Demanded 0 1 3 4 5...
Table refer to a monopolist demand and cost schedules.
Quantity Demanded
0
1
3
4
5
6
Demand Price
20
18
16
14
12
10
8
Quantity Supplied
0
1
2
3
4
5
6
Total Cost
10
14
20
30
42
56
72
NB. Whole table
Derive the marginal revenue and marginal Cost Schedules.
Determine the monopolists profit maximizing price, quantity
and economic profits.
Why is this position an equilibrium position for the
monopolist.
A monopolist faces the following demand and cost schedules Price Quantity Total cost $20 7 $36...
A monopolist faces the following demand and cost schedules
Price Quantity Total cost $20 7 $36 19 8 45 18 9 54 17 10 63 16
11 72 15 12 81
a. How much output should the monopolist produce? b. What price
should the firm charge? c. What is the maximum amount of profit
that this firm can earn?
At a price of $ 80, the quantity demanded of a given good is 200 units....
At a price of $ 80, the quantity demanded of a given good is 200 units. If the price decreases to $ 45, the quantity demanded increases to 225 units.
1. Calculate the value of the price elasticity.
2. Explain what type of claim it is. Explain in detail what
managerial action corresponds to take, raise the price, lower it or
leave it the same.
3. Make the graphic representation.
4. Answer correctly if it is elastic, inelastic or unitary,...
At a price of $ 80, the quantity demanded of a given good is 200 units....
At a price of $ 80, the quantity demanded of a given good is 200 units. If the price decreases to $ 45, the quantity demanded increases to 225 units.
1. Calculate the value of the price elasticity.
2. Explain what type of claim it is. Explain in detail what
managerial action corresponds to take, raise the price, lower it or
leave it the same.
3. Make the graphic representation.
4. Answer correctly if it is elastic, inelastic or unitary,...
The table below shows the supply and demand schedules for sales of bags of chips. PRICE...
The table below shows the supply and demand schedules for sales
of bags of chips. PRICE (dollars/bag) QUANTITY DEMANDED QUANTITY
SUPPLIED (bags/week) $1.00 200 110 $1.25 175 130 $1.50 150 150
$1.75 125 170 $2.00 100 190 Question 1: What is the market
equilibrium? Question 2: Describe the situation in the chip market
if the price were $1.75 per bag. Question 3: If the price is
$1.75/bag, explain how the market reaches equilibrium. Question 4:
A bad year for potatoes...
Single-Price Monopoly: Consider a single-price monopolist (i.e. the monopolist cannot price discriminate) facing the following market...
Single-Price Monopoly:
Consider a single-price monopolist (i.e. the monopolist cannot
price discriminate) facing the following market demand curve:
P = 120 − Q.
The monopolist has constant marginal cost of $20 and zero fixed
cost.
(a) Determine the monopolist’s profit maximizing quantity,
denoted QM, and profit-maximizing price, denoted
PM. (b) Determine the quantity and price that would
result in the market if this instead were a competitive market,
denoted QC and PC, respectively. (c) Draw a
picture of the market...
Suppose that a monopoly faces the demand, marginal revenue, and cost schedules below. Quantity Price Marginal...
Suppose that a monopoly faces the demand, marginal revenue, and
cost schedules below.
Quantity
Price
Marginal Revenue
Marginal Cost
Average Total Cost
1
230
230
100
150
2
210
190
100
125
3
190
150
100
116.6666667
4
170
110
100
112.5
5
150
70
100
110
6
130
30
100
108.3333333
7
110
-10
100
107.1428571
8
90
-50
100
106.25
9
70
-90
100
105.5555556
10
50
-130
100
105
What quantity maximizes profit?
The monopoly Q =...
2. The table below illustrates the quantity of output (in units) and total cost (TC, in...
2. The table below illustrates the quantity of output (in units)
and total cost (TC, in MYR) for a perfectly competitive firm that
can sell its output at MYR 9 per unit.
Quantity
TC
TVC
ATC
AVC
MC
TR
MR
Profit
/Loss
0
3
0
-
-
-
0
-
-3
1
6
2
12
3
21
4
33
5
49
a. Calculate the total variable cost (TVC), average total cost
(ATC), average variable cost (AVC), marginal cost (MC), total...
The table below shows price and quantity data for a hypothetical economy. Quantity Demanded 2018 Prices...
The table below shows price and quantity data for a
hypothetical economy.
Quantity Demanded
2018
Prices 2017
(base year)
Prices
2018 (current
year)
10 kilograms (kg) coffee
$6/kg
$2/kg
10kg tea
$4/kg
$4/kg
Assume that a typical consumer’s food
basket contains only coffee and tea. Moreover, assume that
consumers are completely indifferent between coffee and tea. If the
official “food inflation rate” for 2018 is calculated using a
Paasche index, the substitution bias is demonstrated by the fact
that the...
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