A monopolist facing a market demand Q = 240 – 2p has the total cost function...

A monopolist facing a market demand Q = 240 – 2p has the total cost function TC(q) = q².

1. What is the monopolist’s profit maximizing quantity and price? How many units are produced in each plant?

Now the government notices that the monopolist is actually composed of two production plants, the first plant has a total cost function TC1(q) = 2q^2+ 16q

2. Derive the marginal cost of the second plant, MC2(q).

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

A monopolist faces the demand function Q = 20 – 2P. Its cost function is TC(Q)...

A monopolist faces the demand function Q = 20 – 2P. Its cost function is TC(Q) =0.5Q. Solve for the monopolist’s profit-maximizing price and output and calculate its profit as well as the consumer surplus and deadweight loss.

A monopolist faces a market demand: P = 200 – Q. The monopolist has cost function...

A monopolist faces a market demand: P = 200 – Q. The monopolist has cost function as C = 1000 + Q2, and marginal cost MC = 2Q. ( 1) Solve for Marginal Revenue (MR) function. (2) Find the profit-maximizing quantity? Profit? (3) Suppose the monopolist decides to practice 3rd degree price discrimination. Without solving for the 3rd degree price discrimination, can you compare the new profit earned by the monopolist with the old profit?

Suppose a monopolist faces a market demand curve Q= 120 - 2p. a. If marginal cost...

Suppose a monopolist faces a market demand curve Q= 120 - 2p. a. If marginal cost is constant and equal to zero, what is the magnitude of the welfare loss? b. If marginal cost increases to MC= 10, does welfare loss increase or decrease? Use a graph to explain your answer.

A monopolist operates in a market of demand q = 10−p with a total cost of...

A monopolist operates in a market of demand q = 10−p with a total cost of C(Q, e) = (3/2)e^2 +(5−e)Q, where e represents effort. a. Calculate the price, effort, quantity, and welfare that results from an unregulated monopoly. b. A regulator establishes that price must equal marginal cost. The monopolist is free to select the level of effort. Calculate price, effort, quantity, and welfare in this situation. c. A regulator decides to force price equal to marginal cost and...

Consider a monopolist who has a total cost function C(q) = 1000 + 10q The demand...

Consider a monopolist who has a total cost function C(q) = 1000 + 10q The demand function for the market is D(p) = 600 - 12.5p Answer each part below:(a) Use the inverse demand equation to derive the monopolist's marginal revenue equation, MR(q). (1 points) (b) What is the marginal cost, MC(q)? (0.5 points) (c) Solve for the profit-maximizing quantity and price. Note: Explain or show your work! (2 points) (d) Compute the price elasticity of demand at the profit-maximizing...

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?

The market demand function for corn is Q(d) = 30- 2P and the market supply function...

The market demand function for corn is Q(d) = 30- 2P and the market supply function is Q(s)= 5P - 2.5, both measured in billions of bushels per year. Suppose the import supply curve is infinitely elastic at a price of $3.50 per bushel. a. Calculate consumer surplus, producer surplus, and aggregate surplus. b. Whatwouldbethewelfareeffectsofatariffof$1.00perbushel?

A monopolist has the following demand function and marginal cost function P = 120 – Q...

A monopolist has the following demand function and marginal cost function P = 120 – Q and MC = 30 + Q. i. Derive the monopolist’s marginal revenue function. ii. Calculate the output the monopolist should produce to maximize its profit. ii. (continuation) iii. What price does the monopolist charge to maximize its profit? Now assume that the monopolist above split into two large firms (Firm A and Firm B) with the same marginal cost as the monopolist. Let qA...

A monopolist has a marginal cost curve MC=Q and a home market demand P=30-Q. The monopolist...

A monopolist has a marginal cost curve MC=Q and a home market demand P=30-Q. The monopolist can also sell in a foreign market at a price pf Pf=12. Find and graph the quantity produced, quantity sold at home, and quantity sold in the foreign market, as well as the price charged at-home market. Explain why the monopolist's profits would fall if it were to produce the same quantity but sell more in the home market.

A monopoly has the cost function c(y)=10y+100, and is facing a market demand D(p)=100-2p. What is...

A monopoly has the cost function c(y)=10y+100, and is facing a market demand D(p)=100-2p. What is the inverse demand function, p(y)? Having profits be π = p(y)∙y – c(y), what is the profit maximizing output level? What is the corresponding market price? Calculate the monopolist’s profit and producer surplus. What is the consumer surplus? What is the deadweight loss? The government imposes a production tax, tP=10, so that the new cost function is c(y)=(10+tP)y+100. What happens to y and p?...

Subjects