Question

In: Economics

For each of the problems below solve for monopoly quantity, monopoly price, total revenue, total cost,...

For each of the problems below solve for monopoly quantity, monopoly price, total revenue, total cost, profit, and dead weight loss.

Qd = 100 – 0.5p TC = 2Q²

Qd = 500 – 0.2p TC = Q² + 100Q

Qd = 30 – 0.6p TC = Q² + 10Q +100

QD = 1000 – 0.25p TC = 2Q² + 25Q + 100

Expert Solution

Monopolist maximizes profit at MR = MC

1.

P = 200 - 2Q

TR = 200Q - 2Q²

MR = 200 - 4Q

Total cost, TC = 2Q²

MC= 4Q

Equate MR to MC

200 - 4Q = 4Q

=> 8Q = 200

=> Qm = 25 units

=> Pm = $ 150 per unit

TR = 25 × 150 = $ 3750

TC = 2× 25^2 = $ 1250

Profit = TR -TC = 3750 - 1250 = $ 2500

DWL = (1/2)×(Pm -MC) ×(Qp-Qm)

= (1/2)×(150-133.33)×(33.33-25)

= $ 69.42

Note: Qp is output under perfect competition. P = MC

200 - 2Q = 4Q

6Q = 200

Qp = $ 100/3

2.

3.

4. Refer the attached picture

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Rahul Sunny answered 5 months ago

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