A monopoly faces market demand Q = 30−P and has a cost function C(Q) = Q^2...

A monopoly faces market demand Q = 30−P and has a cost function C(Q) = Q^2

(a) Find the profit maximizing price and quantity and the resulting profit to the monopoly.

(b) What is the socially optimal price? Calculate the deadweight loss (DWL) due to the monopolist behavior of this firm. Calculate consumer surplus (CS) and producer surplus (PS) given the profit maximizing price.

(c) Assume that the government puts a price ceiling on the monopolist at P =22. How much output will the monopolist produce? What will be the profit of the monopolist? Calculate CS, PS, and DWL.

(d) Assume that the government put a price ceiling on the monopolist in order to maximize the total (i.e. consumer plus producer) surplus. What price ceiling should it choose? How much output will the monopolist produce at this price ceiling? What will the profit of the monopolist be? What is the DWL?

Expert Solution

Rahul Sunny answered 8 months ago

A monopolist with the cost function C(q) = q faces the market demand curve p =...

A monopolist with the cost function C(q) = q faces the market demand curve p = 101 -2q. What is the maximum amount the monopolist is willing to pay for advertising that shifts its demand curve to p = 101-q?

The inverse demand function a monopoly faces is P = 100 − Q. The firm’s cost...

The inverse demand function a monopoly faces is P = 100 − Q. The firm’s cost curve isTC(Q) = 10 + 5Q.Suppose instead that the industry is perfectly competitive. The industry demand curve and firm cost function is same as given before. (j) (4 points) What is the level of output produced? Compare it to the output of single price monopoly. (k) (4 points) What is the equilibrium price for this industry? Compare it to the price charged of single...

A monopolist faces a market demand: P = 200 – Q. The monopolist has cost function...

A monopolist faces a market demand: P = 200 – Q. The monopolist has cost function as C = 1000 + Q2, and marginal cost MC = 2Q. ( 1) Solve for Marginal Revenue (MR) function. (2) Find the profit-maximizing quantity? Profit? (3) Suppose the monopolist decides to practice 3rd degree price discrimination. Without solving for the 3rd degree price discrimination, can you compare the new profit earned by the monopolist with the old profit?

x A monopoly faces the demand curve P = 110 — Q and has the cost...

x A monopoly faces the demand curve P = 110 — Q and has the cost function C (Q) = 10Q + Q2. Compare the total Q, profits, producer surplus, consumer surplus and DWL compared to perfect competition for: a. single-price monopoly, b. the perfectly price-discriminating monopoly, c. and a quantity-discriminating monopoly (block pricing) by considering one possible price schedule: sell its first 25 units (Q1) at P1 = 85 and sell an additional (Q2 — Q1) = —235 units...

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

12. Suppose a monopoly firm faces the market demand Q = 500 – p and has cost function C = 100 + Q2 . Find the firm’s profit, CS, PS, and DWL for the following scenarios: a. The monopoly firm charges a single price b. The monopoly firm perfectly price discriminate c. The monopoly firm adopts a block-pricing schedule with 2 quantity blocks

1.6 The inverse demand curve a monopoly faces is p=100-Q. The firm's cost curve is C(Q)...

1.6 The inverse demand curve a monopoly faces is p=100-Q. The firm's cost curve is C(Q) = 10 + 5Q(soMC = 5).What is the profit - maximizing solution? How does your answer change if C(Q) = 100 + 5Q? 1.10 The inverse demand curve a monopoly faces is p = 10Q^-0.5 a. What is the firm's marginal revenue curve? b. The firm's cost curve is C(Q) = 5Q. What is the profit - maximizing solution? 3.9 Consider the inverse demand...

A monopoly faces the following demand function: P=1200-Q. Variable production costs are VC(Q)=2Q^2.

A monopoly faces the following demand function: P=1200-Q. Variable production costs are VC(Q)=2Q^2. The firm also pays $50000 in costs that do not depend on production (even if q=0).What are the sunk costs, the fixed (but not sunk) costs, and the variable costs for this firm?Find the profit maximizing quantity and price, as well as profits.Repeat question 1 above if the costs of the firm are now 0 if it does not produce, but 2Q^2+150000 if it produces any positive...

A monopolist faces a market demand curve of q=100-p. The monopolist’s cost function is given by...

A monopolist faces a market demand curve of q=100-p. The monopolist’s cost function is given by (q) = 3000 + 20q. a) If the monopolist can perfectly price discriminate, how many units will be sold? b) If the monopolist can perfectly price discriminate, how much consumer surplus will there be? c) If the monopolist cannot price discriminate, how much consumer surplus will there be? (For this question, think long run.)

A monopolist has the cost function C(Q) = 30*Q, and faces two types of consumers, A...

A monopolist has the cost function C(Q) = 30*Q, and faces two types of consumers, A and B, with the following demand curves for its product: PA = 60 – 3*QA PB = 80 – 2*QB (4 points) What price will the monopolist charge under uniform pricing? (3 points) What prices will the monopolist charge if it can price discriminate? (3 points) How much higher is the monopolist’s profit in (b) than in (a)?

Consider a monopoly that faces a demand curve and short run total cost function of: P=...

Consider a monopoly that faces a demand curve and short run total cost function of: P= 270-2Q TC= 4700+1/4Q2 A. Find the profit-maximizing quantity for this monopolist. B. How much profit will the firm make? C. Represent this situation graphically, pointing out all the features, including cost curves. D. How much is the deadweight loss caused by the monopolist?

Question