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 the profit maximizing price and total output and calculate a typical firm’s profit or loss at the profit maximizing output.
c. Which market structure is more efficient, i.e., monopoly or perfect competition? Also explain your answer in (c) diagrammatically.

Expert Solution

Rahul Sunny answered 2 years ago

Suppose that the market demand is: P = 24 – 3Q, and marginal revenue is: MR...

Suppose that the market demand is: P = 24 – 3Q, and marginal revenue is: MR = 24 – 6Q. The marginal cost is: MC = 6 and 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 the profit maximizing price and total output and calculate a...

the demand for beef is P = 150 - 3Q where price is price per pound...

the demand for beef is P = 150 - 3Q where price is price per pound in cents and Q is quantity demanded per year in hundreds of pounds The supply curve is P = 5Q If a price floor of 50 cents per pound is imposed what are the new consumer and producer surplus?

Suppose that a firm faces the demand curve, P = 100 - 3Q, where P denotes...

Suppose that a firm faces the demand curve, P = 100 - 3Q, where P denotes price in dollars and Q denotes total unit sales. The cost equation is TC = 200 + 22Q. a. Determine the firm’s profit-maximizing output and price. b. Suppose that there is a change in the production process so that the cost equation becomes TC = 80 + 12Q + Q2. Determine the resulting effect on the firm’s output: c. Using the two...

Suppose that market demand can be represented as p = 100 - 3Q. There are 10...

Suppose that market demand can be represented as p = 100 - 3Q. There are 10 identical firms producing an undifferentiated product, each with the marginal cost function MC = 3q. If the firms form a cartel, the marginal revenue for the cartel is MR = 100 - 6Q. Compare the competitive outcome with the cartel outcome. What is the individual firm's incentive to cheat on the cartel? (show the procedure you reach your conclusion)

Market demand curve for a pair of Cournot duopolist is given as P = 36-3Q where...

Market demand curve for a pair of Cournot duopolist is given as P = 36-3Q where Q = q1 + q2. The constant per unit marginal cost is 18 for each firm. Find the best response function for each firm, the Cournot equilibrium price and market quantity. What is the Cournot Lerner Index?

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...

Stackelberg Leader-Follower duopolists face a market demand curve given by P = 120 - 3Q where...

Stackelberg Leader-Follower duopolists face a market demand curve given by P = 120 - 3Q where Q is total market demand. Each firm can produce output at a constant marginal cost of 20 per unit. The equilibrium price for the total market will be...?

Suppose the inverse demand function is given by ?=5?−5p=5q−5 where p is the market price and...

Suppose the inverse demand function is given by ?=5?−5p=5q−5 where p is the market price and q is the quantity demanded. Calculate price elasticity of demand. Round your answer to the first decimal place. There is no value for p. This is all the information the question gives.

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...

1. Suppose that the market demand is described by P = A – B(Q+q) where P...

1. Suppose that the market demand is described by P = A – B(Q+q) where P is the market price, Q is the output of the incumbent firm, and q is the output of the potential entrant to the market. The incumbent’s total cost function is C(Q) = c1Q, whereas the cost function of the entrant is C(q) = c2q+F. a. If the entrant firm observes the incumbent producing Q* units of output and expects this output level to be...

Question