The demand function for iPhone is Q(p) = 100 – P and the cost function is...

The demand function for iPhone is Q(p) = 100 – P and the cost function is C(Q) = 5Q. Apple initially sets the price of iPhone to be p1; after one-year Apple lowers the price to p2. Suppose the price decrease is not anticipated by the consumers. The number of consumers buying the iPhone at p1 is q1, and the amount buying at p2 is q2, where q1=Q(p1) and q1+q2=Q(p2). Find the profit-maximizing p1 and p2 and the corresponding q1 and q2 as well as the consumer’s surplus and Apple’s profit. This is form of second-degree price discrimination.

Expert Solution

Rahul Sunny answered 2 years ago

The inverse demand function a monopoly faces is P = 100 − Q. The firm’s cost...

The inverse demand function a monopoly faces is P = 100 − Q. The firm’s cost curve isTC(Q) = 10 + 5Q.Suppose instead that the industry is perfectly competitive. The industry demand curve and firm cost function is same as given before. (j) (4 points) What is the level of output produced? Compare it to the output of single price monopoly. (k) (4 points) What is the equilibrium price for this industry? Compare it to the price charged of single...

2. If the demand function for X is Q = 100 - P, and the supply...

2. If the demand function for X is Q = 100 - P, and the supply function for X is Q = 40 + 2P, determine the effects on: (a) equilibrium price, (b) quantity traded and (c) government revenue (or cost) if: A tax of $ 6 per unit produced is established. (Is it different from the case of establish a tax of $ 6 per unit consumed?)

A monopolist faces a market demand curve of q=100-p. The monopolist’s cost function is given by...

A monopolist faces a market demand curve of q=100-p. The monopolist’s cost function is given by (q) = 3000 + 20q. a) If the monopolist can perfectly price discriminate, how many units will be sold? b) If the monopolist can perfectly price discriminate, how much consumer surplus will there be? c) If the monopolist cannot price discriminate, how much consumer surplus will there be? (For this question, think long run.)

1. The demand function for the Baye Firm is: P = 100 – 0.5 Q The...

1. The demand function for the Baye Firm is: P = 100 – 0.5 Q The firm’s total cost function is: 1500 – 10 Q + 0.5Q2 (a) Is this a perfectly competitive firm? (5 Points) (b) Find the output level and price at which the firm’s total revenue is maximized. (10 Points) (c) Find the output level and price at which the firm’s total profit is maximized. (10 Points) (d) Is demand elastic, unitary elastic, or inelastic at the...

Demand function is: Q = 16 – p. Supply function is: Q = -4 + p....

Demand function is: Q = 16 – p. Supply function is: Q = -4 + p. (Show me your math) a) What is the quantity demanded and quantity supplied at price 6? Is there an excess demand or supply? b) What is the equilibrium price and quantity?

2. A firm has a demand and cost function given by: D: P=100-Q, C: P=10+2q1+4q2 a)...

2. A firm has a demand and cost function given by: D: P=100-Q, C: P=10+2q1+4q2 a) Demonstrate whether this firm has economies to scale. b) Demonstrate whether this firm has economies of scope. c) Assume that the firm is the only firm in the market, derive graphically and numerically the optimal quantity, price and the profits/losses. d) What is the Lerner Index? Provide a numerical value and explain the relevance of the index/how it is used

Consider a market where the inverse demand function is p =100 – Q, Q = q1+q2....

Consider a market where the inverse demand function is p =100 – Q, Q = q1+q2. Both firms in the market have a constant marginal cost of $10 and no fixed costs. Suppose these two firms are engaged in Cournot competition. Now answer the following questions: a) Define best response function. Find the best response function for each firm. b) Find Cournot-Nash equilibrium quantities and price. c) Compare Cournot solution with monopoly and perfect competitive solutions.

1. Assume the market demand function is D(P)=100 – P and the firm cost function is...

1. Assume the market demand function is D(P)=100 – P and the firm cost function is C(q)= 20q. The industry is populated by many small firms that offer identical products. In the absence of regulation, a competitive equilibrium would be achieved. However, regulation is in place and requires that a firm’s price be at least as great as 30. Derive the effect of regulation on quantity, firm profits, and social welfare. 2. Now think that the industry is deregulated. What...

The market demand is given as; P = 100 – Q Marginal cost of production is...

The market demand is given as; P = 100 – Q Marginal cost of production is given as; MC = 10 Calculate the level at which market decides to produce and market price Total Revenue ( TR) and Total Cost (TC) Economic Profit (π) Identify the market structure; either perfect competition or monopoly?

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?

Question