Question
In: Economics
14. Consider a monopoly facing the following demand, marginal revenue, total cost, and marginal cost curves:...
14.
Consider a monopoly facing the following demand, marginal revenue,
total cost, and marginal cost curves:
Demand curve: P = 12 – 0.002 Q
Marginal revenue curve: MR = 12 – 0.004 Q
- Total cost curve: TC = 3Q +0.0005Q2
Marginal cost curve: MC = 3 + 0.001 Q
a. Calculate the profit maximizing output of this monopoly. Briefly explain your answer.
b. What is the socially efficient output level? Briefly explain your answer.
c. Suppose the government wants to adopt a price ceiling to induce this monopoly to produce at the socially efficient output level. Briefly explain what the level of this price ceiling should be and what will be the economic profit of this monopoly under this price ceiling.
Solutions
Rahul Sunny answered 8 months agoRelated Solutions
Draw a graph for a monopoly with demand, marginal revenue, and marginal cost curves.
Assignment: Draw a graph for a monopoly with
demand, marginal revenue, and marginal cost curves. Identify the
profit-maximizing output level (Qm) and price (Pm). (Photos of your
work are not accepted) Suppose the monopolist sells Qm units of
output at the regular price and then puts the product on sale at a
lower price, Ps. Show the new price and quantity. What happens to
the firm’s profits? Does price discrimination lead to a more
efficient or less efficient outcome? Why...
Draw the graph for a monopoly with demand, marginal revenue, and marginal cost curves. Identify the...
Draw the graph for a monopoly with demand, marginal revenue, and
marginal cost curves. Identify the profit-maximizing output level
(Qm) and price (Pm). Suppose the monopolist sells Qm units of
output at the regular price and then puts the product on sale at a
lower price, Ps. Show the new price and quantity. Identify the
consumer surplus of the additional sales. What happens to the
firm’s profits and Does price discrimination lead to a more
efficient or less efficient outcome?...
The Marginal Revenue curve facing a monopoly firm is a) identical to its demand and average...
The Marginal Revenue curve facing a monopoly firm is
a) identical to its demand and average revenue curve.
b) perfectly elastic.
c) below its demand and average revenue curve.
d) the same as it is for a perfectly competitive firm.
For a firm in a perfectly competitive market
a) The firm must decrease price if it wants to sell an
additional unit of the product
b) The demand curve is downward sloping
c) Price = Average Revenue = Marginal Revenue...
Monopoly: Consider a monopoly firm facing a demand curve Q = 100– P. The marginal...
Monopoly: Consider a monopoly firm facing a demand curve Q = 100
– P. The marginal revenue curve is therefore MR= 100 – 2Q. This
firm has fixed costs =$1000 and constant marginal cost =$20. Total
costs are $1000 + $20Q and average costs are $1000/Q + $20. a. What
is the firm’s profit maximizing level of output? What price does it
charge to sell this amount of output? How much profit does it make?
Show your work. b. Suppose...
The following equations describe a firm’s demand, marginal revenue, total cost, & marginal cost: Demand: P...
The following equations describe a firm’s demand,
marginal revenue, total cost, & marginal cost:
Demand: P = 1,000 – 10Q
Total Cost: TC = 500 + 10Q + Q^2
Marginal Revenue: MR = 1,000 – 20Q
Marginal Cost: MC = 10 + 2Q
a. What level of output should be produced to maximize
profits?
b. What is the market price?
c. How much profit will be earned?
d. The firm sells cereal and competes with other firms selling
slightly differentiated...
Consider a fishery characterized by the following total cost (TC) and total revenue (TR) curves as...
Consider a fishery characterized by the following total cost
(TC) and total revenue (TR) curves as a function of total effort
(E): TC = 12E and TR = 32E – E 2 , Differentiating these functions
yields the marginal cost (MC) and marginal revenue (MR) curves: MC
= 12 and MR = 32 – 2E.
a. Draw a graph depicting total costs and total revenues as a
function of effort in the fishery. At what effort level are total
revenues...
A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost...
A monopolist faces the following demand curve, marginal revenue
curve, total cost curve and marginal cost curve for its
product:
Q = 200 - 2P MR = 100 - Q TC = 5Q MC = 5
a) suppose that a tax of $5 for each unit produced is imposed by
state government. What is the profit maximizing level of
output?
b) suppose that a tax of $5 for each unit produced is imposed by
state government. What is the price...
A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost...
A monopolist faces the following demand curve, marginal revenue
curve, total cost curve and marginal cost curve for its product: Q
= 200 ; MR = 100-Q ; TC = 5Q ; MC = 5
a) Suppose that a tax of $5 for each unit produced is imposed by
state government. What is the profit maximizing level of
output?
b) Suppose that a tax of $5 for each unit produced is imposed by
state government. What is the profit maximizing...
A monopolist faces the following demand curve, marginal revenue, total cost curve and marginal cost curve...
A monopolist faces the following demand curve, marginal revenue,
total cost curve and marginal cost curve for its product: Q = 200 -
2P ; MR = 100 - Q ; TC = 5Q ; MC = 5
a) What level of output maximizes total revenue?. b) What is the
profit maximizing level of output?. c) What is the profit
maximizing price?. d) How much profit does the monopolist earn? e)
Suppose that a tax of $5 for each unit...
A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost...
A monopolist faces the following demand curve, marginal revenue
curve, total cost curve and marginal cost curve for its product: Q
= 200 - 2P MR = 100 - Q TC = 5Q MC = 5 a. What is the profit
maximizing level of output? (10 pts.) b. What is the profit
maximizing price? (8 pts.) c. How much profit does the monopolist
earn? (10 pts.)Immersive Reader (28 Points)
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