Question
In: Economics
3. Consider a Monopoly with the following demand and cost structures: Price $18 $14 $12 $10...
3. Consider a Monopoly with the following demand and cost structures: Price $18 $14 $12 $10 Quantity/ Output10 60 70 80
(a) First, label the relevant graphs correctly. (2 points)
(b) From the diagram what is the profit maximizing output of the monopolist? Why? (2 points)
(c) From the diagram what is the price that the monopolist charges on each unit she sells. Briefly explain. (1 point)
(d) Compute the Monopolist’s profit? (2 points)
(e) If instead this was a perfectly competitive market, what would be the profit maximizing output of this market, and its price? Briefly explain. (2 points)
(f) If this was still a perfectly competitive market with the same cost structure as the monopolist, would the market to be in the short or in the long run? Briefly explain. (2 points)
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
14. Consider a monopoly facing the following demand, marginal revenue, total cost, and marginal cost curves:...
14.
Consider a monopoly facing the following demand, marginal revenue,
total cost, and marginal cost curves:
Demand curve: P = 12 – 0.002 Q
Marginal revenue curve: MR = 12 – 0.004 Q
Total cost curve: TC = 3Q +0.0005Q2
Marginal cost curve: MC = 3 + 0.001 Q
a. Calculate the profit maximizing output of this monopoly.
Briefly explain your answer.
b. What is the socially efficient output level? Briefly explain
your answer.
c. Suppose the government wants to...
Consider a monopoly facing inverse demand function ?(?) = 12 − ?, where ? = ?1...
Consider a monopoly facing inverse demand function ?(?) = 12 −
?, where ? = ?1 + ?2 denotes the monopolist’s production across two
plants, 1 and 2. Assume that total cost in plant 1 is given by ??1
(?1 ) = (5 + 4?1)?1, while that of plant 2 is ??2 (?2 ) = [5 + (4 +
?)?2]?2, where parameter ? ≥ 0 represents plant 2’s inefficiency to
plant 1. When ? = 0, the total (and marginal)...
Is a monopoly with the following cost curve facing the following demand curve a natural monopoly?...
Is a monopoly with the following cost curve facing the following
demand curve a natural monopoly?
P(Q)=100-5Q
C(Q) = 8,000 + 10 Q2
A.Yes
B. No
C. Cannot be determined from the information provided
2. Consider the following hourly demand and cost schedule for a monopoly firm; (Tπ, is Total...
2. Consider the following hourly demand and cost
schedule for a monopoly firm;
(Tπ, is Total
Profit).
Q P TR MR TC TVC MC ATC AVC Tπ
0 19 $4.00
1 18 4
2 17 2
3 16 1
4 15 2
5 14 3
6 13 4
7 12 5
8 11 6
9 10 7 ___________________________
Consider the following supply and demand functionsqD = 12-3pqS = -3 + 2pSuppose...
Consider the following supply and demand functionsqD = 12-3pqS = -3 + 2pSuppose a per unit tax of 1 were charged to the buyer.a) How much does the buyer pay?b) How much does the seller receive?c) What is the equilibrium quantity?d) How much tax revenue is generated?e) How much tax burden do the buyer and seller each bear?f) Calculate the consumer surplus, producer surplus, welfare
level, and dead weight loss with this tax.g) Suppose the per unit tax were charged...
3. Suppose a monopoly firm faces demand for its product of ? = 12 − 2?...
3. Suppose a monopoly firm faces demand for its product of ? =
12 − 2? and has total cost ?? = 8 + 4?. Its
production process, however, generates a pollution side effect
that imposes a total cost on all others of 2?.
a. Before any correction for external costs, identify….the total
revenue function of the firm.
TR = _________________________________________
b. ... the marginal revenue function of the firm. MR =
_________________________________________
c. … the marginal cost function of...
Periods 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 12% 14% 15% 16% 18%...
Periods
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
12%
14%
15%
16%
18%
20%
1
0.990
0.980
0.971
0.962
0.952
0.943
0.935
0.926
0.917
0.909
0.893
0.877
0.870
0.862
0.847
0.833
2
0.980
0.961
0.943
0.925
0.907
0.890
0.873
0.857
0.842
0.826
0.797
0.769
0.756
0.743
0.718
0.694
3
0.971
0.942
0.915
0.889
0.864
0.840
0.816
0.794
0.772
0.751
0.712
0.675
0.658
0.641
0.609
0.579
4
0.961
0.924
0.888
0.855
0.823
0.792
0.763
0.735
0.708
0.683
0.636...
Cork price: 16 10 15 10 17 11 14 13 11 14 11 16 18 16...
Cork price: 16 10 15 10 17 11 14 13 11 14 11 16 18 16 10 17 14
14 16 7 10 12 19 15 16 14 9 12 21 13 10 16 12 16 13 17 17 13 14 18
11 12 15 16 13 18 16 17 12 12 14 9 11 14 19 13 11 17 11 13 15 14 18
18 18 12 10 11 13 14 11 14 18 13 13 19 17 14...
Cork price 16 10 15 10 17 11 14 13 11 14 11 16 18 16...
Cork price 16 10 15 10 17 11 14 13 11 14 11 16 18 16 10 17 14 14
16 7 10 12 19 15 16 14 9 12 21 13 10 16 12 16 13 17 17 13 14 18 11
12 15 16 13 18 16 17 12 12 14 9 11 14 19 13 11 17 11 13 15 14 18 18
18 12 10 11 13 14 11 14 18 13 13 19 17 14...
Consider the following data set with 10 observations: 6, 7, 7, 8, 10, 12, 14, 16,...
Consider the following data set with 10 observations: 6, 7, 7,
8, 10, 12, 14, 16, 18, X . Find 3 different values of X for which
mean=median .
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