Suppose the market is monopoly. The market demand function is Q subscript d equals 60 -...

Suppose the market is monopoly. The market demand function is Q subscript d equals 60 - 0.5 P, where p is the price. The firm has no fixed cost, and the marginal cost MC = 30. a. Write down the marginal revenue of this firm. b. Calculate the profit-maximizing monopolistic price and quantity. c. Calculate the profit of the firm. d. Calculate consumer surplus. After selling the products to the consumers in question (a)-(b), there are still other consumers in the market willing to buy this product at lower price. This firm is able to do price discrimination in the secondary market. e. Write down the demand function and marginal revenue in the secondary market. f. Calculate the price and quantity in the secondary market. g. Calculate the profit of the firm in the secondary market. h. Calculate consumer surplus in the secondary market. i. Show that the welfare loss is less when the firm is able to do price discrimination. You need to calculate the welfare loss before and after the price discrimination respectively. j. Calculate the price elasticity of demand in the first market and in the secondary market.

Expert Solution

Rahul Sunny answered 7 months ago

suppose the market demand function for ice cream is Q^d = 10 - 2P and the...

suppose the market demand function for ice cream is Q^d = 10 - 2P and the market supply function for ice cream is Q^5 = 4P - 2, both measured in millions of gallons of ice cream per year. Suppose the government imposes a $0.50 tax on each gallon of ice cream produced. The price received by sellers with the tax is? a. 2.33 b. 1.50 c. 1.73 d. 1.83

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Assume that the market demand function is: Q(D) = 2000 - 5P And the market supply...

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12. Suppose a monopoly firm faces the market demand Q = 500 – p and has...

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(Perfect Competition and consumer Surplus) Suppose the demand function for widgets is Q(p) = 60 –...

(Perfect Competition and consumer Surplus) Suppose the demand function for widgets is Q(p) = 60 – p, and all firms that produce widgets have total cost function C(q) = 16 + q^3 . a) Suppose that the market is perfectly competitive and there is free entry and exit. All firms that enter use the same technology. A firm that decides to stay out of the market can avoid paying the fixed cost and has a profit of zero. Solve for...

Suppose the domestic market demand function in a certain market where Q is measured in thousands...

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If a monopoly faces an inverse demand curve of p equals=390390minus−Q, has a constant marginal and...

If a monopoly faces an inverse demand curve of p equals=390390minus−Q, has a constant marginal and average cost of $30, and can perfectly price discriminate, what is its profit? What are the consumer surplus, welfare, and deadweight loss? How would these results change if the firm were a single-price monopoly?

Suppose the market inverse demand function for rubbing alcohol is p = 120 – q. a....

Suppose the market inverse demand function for rubbing alcohol is p = 120 – q. a. What is the consumer surplus if the price is $30? b. Now suppose the price increases to $40. i. What is the reduction in consumer surplus coming from existing buyers who are still able to purchase rubbing alcohol at $40? ii. What is the reduction in consumer surplus coming from buyers who can no longer purchase rubbing alcohol at $40, but were able to...

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