Question

In: Economics

Part 4: Calculate the total revenue and marginal revenue for each output level. Your solution will...

Part 4: Calculate the total revenue and marginal revenue for each output level. Your solution will need to be in a table.

Part 5: Apply the economic decision rule to determine the monopolists profit maximizing output level. Once you have determined the output level, identify the price the monopolist will charge.

Part 6: Calculate the consumer surplus, producer surplus and deadweight loss under the monopoly.

Part 7. Assume that the monopolist can perfectly price discriminate. What price does the monopolist charge each consumer? Write you answers in the table below.

Consumer Number

Price

1

2

3

4

5

6

7

8

9

10

Part 8: If the monopolist can perfectly price discriminate, what is consumer surplus, producer surplus and the deadweight loss?

Solutions

Expert Solution

15) If the firms' average total cost is falling at the point of profit maximization then in that case "The firm should increase the quantity of production to increase the profit" The correct answer is "D". If the firm increases the production its total average cost will fall further and increase the profit.

16) The correct answer to this question is "D". All the options given are correct. In natural monopoly the monopoly earns a supernormal profit, it produces at a point where its average cost is greater than the marginal cost to earn a profit. The second option, if the number of firms is increased in a monopoly then the firm has to decrease its production to maintain it price elasticity and monopoly power. And the third option says a monopoly firm can produce alone at a much lower price and more output which is correct because the monopoly has a lot of excess capacity.

17) The correct answer is "C". If the monopoly increases its production its marginal revenue will increase or decrease at a different level of output. Because the marginal revenue curve is downward sloping.

PS: for question 14 .. please write the table values in the comment section I will answer.

Thank you...


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