A monopolist faces a demand curve P= 11 – Q, where P is measured in dollars...

A monopolist faces a demand curve P= 11 – Q, where P is measured in dollars per unit and Q in thousands of units. The monopolist has a constant average cost of $6 per unit. a. Draw the average and marginal revenue curves and the average and marginal cost curves. What are the monopolist’s profits-maximizing price and quantity? What is the resulting profit? Calculate the firm’s degree of market power using the lerner index. b. A government regulatory agency sets a price ceiling of $7 per unit. What quantity will be produced and what will the firms profit be? What happens to the degree of monopoly power? c. What price ceiling yields the largest level of output? What is the firm’s degree of monopoly power at this price?

Expert Solution

Rahul Sunny answered 2 years ago

A monopolist faces the demand curve P =11 Q, where P is measured in dollars per...

A monopolist faces the demand curve P =11 Q, where P is measured in dollars per unit and Q in thousands of units. The monopolist has a constant average cost of $6 per unit. Answer the following questions, showing all workings. a) Calculate the monopolists profit-maximizing price and quantity. Calculate the monopolists profit. b) Draw the average and marginal revenue curves and the average and marginal cost curves for the monopolist including the area of profits (label the diagram accurately...

A monopolist faces a demand curve of Q = 164 – P, where P is price...

A monopolist faces a demand curve of Q = 164 – P, where P is price and Q is the output produced by the monopolist. What choice of output will maximize revenue? Group of answer choices 70 74 82 86 if monopolist produces good X and faces a demand curve X = 112 - 2P, where P is price. What is the monopolist's marginal revenue as a function of good X? Group of answer choices 44 - X 56 -...

A monopolist faces the following average revenue (demand) curve: P = 100 – 0.01Q Where Q...

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A monopolist faces a demand curve of P = 120 – Q, and has costs of...

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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?

Assume that a monopolist faces a demand curve given by: Q = 100 – P Also...

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A monopolist faces a downward sloping demand curve, P = 911.0 - 16.5*Q. It has a...

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Suppose the firm is a monopolist. It faces a downward-sloping demand curve, P(Q). If it also...

Suppose the firm is a monopolist. It faces a downward-sloping demand curve, P(Q). If it also has non-negative marginal cost, will it choose a quantity on the demand curve where the price elasticity of demand is less than, greater than, or equal to -1? Explain. Two Hints: First, recall that R(Q) = P(Q) times Q, and that the price elasticity of demand is defined as . Second, recall the condition MR = MC. Think about how the firm’s revenue will...

Suppose a monopolist faces a market demand curve Q = 50 - p. If marginal cost...

Suppose a monopolist faces a market demand curve Q = 50 - p. If marginal cost is constant and equal to zero, what is the magnitude of the welfare loss? If marginal cost increases to MC = 10, does welfare loss increase or decrease? Use a graph to explain your answer

1. A monopolist faces the following demand curve: P = 40 - 2 Q. His...

1. A monopolist faces the following demand curve: P = 40 - 2 Q. His total cost curve is TC = 50 + 4 Q + Q2. The equilibrium quantity for this monopolist is … and the equilibrium price is … A. 6; $26, respectively. B. 9, $26, respectively. C. 9, $28, respectively. D. 6; $28, respectively. E. None of the above. 2. Using the information in question #1, the monopolist’s profit is … and the Lerner...

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