Assume a monopolist faces a market demand curve ?=50−1/2? and has the short run total cost...

Assume a monopolist faces a market demand curve ?=50−1/2? and has the short run total cost function C=640+20Q. What is the profit-maximizing level of output? What are profits? Graph the marginal revenue, marginal cost, and demand curves, and show the area that represents deadweight loss on the graph. In the question above, what would price and output be if the firm priced at socially efficient (competitive) levels? What is the magnitude of the deadweight loss caused by monopoly pricing?

Expert Solution

Rahul Sunny answered 2 years ago

Assume a monopolist faces a market demand curve P= 200 -4Q and has the short-run total...

Assume a monopolist faces a market demand curve P= 200 -4Q and has the short-run total cost function C= 480 + 40Q. What are the profit-maximizing price, quantity and profits? Graph the marginal revenue, marginal cost, and demand curves, and show the area that represents deadweight loss on the graph.

A monopolist faces a market (inverse) demand curve P = 50 − Q . Its total...

A monopolist faces a market (inverse) demand curve P = 50 − Q . Its total cost is C = 100 + 10Q + Q2 . a. (1 point) What is the competitive equilibrium benchmark in this market? What profit does the firm earn if it produces at this point? b. (2 points) What is the monopoly equilibrium price and quantity? What profit does the firm earn if it produces at this point? c. (2 points) What is the deadweight...

A monopolist faces a single market with the following demand curve and total cost P =...

A monopolist faces a single market with the following demand curve and total cost P = 180 – 2.5Q and TC = 2Q2 i. Determine the quantity of output that it should produce and the price it should charge to maximize profit. Then, calculate the profit.

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

Assume a monopolist faces a market demand curve P = 190 - 3Q and has the...

Assume a monopolist faces a market demand curve P = 190 - 3Q and has the short-run total cost function C = 540 + 10Q. What is the profit-maximizing level of output? What are profits? Graph the marginal revenue, marginal cost, and demand curves, and show the area that represents deadweight loss on the graph. (Hint: derive the MR and MC functions and set MC=MR and solve). In Question 3 above, what would price and output be if the firm...

Consider a duopolistic market in which the inverse demand curve is ?=50−2? and the short-run total...

Consider a duopolistic market in which the inverse demand curve is ?=50−2? and the short-run total cost functions of the firms are given by ????1=10+2?1 and ????2=12+8?2. a. Suppose this market is analyzed using a Cournot model. Determine the output level of each firm and the market price. b. Suppose this market is analyzed using a Stackelberg model where firm 2 is the leader and firm 1 is the follower. Determine the output level of each firm and the market...

Consider a monopoly that faces a demand curve and short run total cost function of: P=...

Consider a monopoly that faces a demand curve and short run total cost function of: P= 270-2Q TC= 4700+1/4Q2 A. Find the profit-maximizing quantity for this monopolist. B. How much profit will the firm make? C. Represent this situation graphically, pointing out all the features, including cost curves. D. How much is the deadweight loss caused by the monopolist?

A monopolist has a total cost given by 9Q^2+18Q+21 and faces a demand curve given by...

A monopolist has a total cost given by 9Q^2+18Q+21 and faces a demand curve given by -4Q+120. What is the profit-maximizing quantity the monopolist supplies the market? (Answer is 51/13, how did they get this?) What is the profit-maximizing price the monopolist sets in this market? ((Answer is 1356/13, how did they get this?) Suppose instead of a monopoly, the market is served by a bunch of perfectly competitive firms each with the same cost structure as the monopolist What...

Problem 1: A monopolist faces the following demand curve, marginal revenue curve, total cost curve and...

Problem 1: A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product: Market demand function: Q = 200 - 2P (direct form, which shows Q as a function of P) Market demand function in the indirect form: P = 100 – 0.5Q (indirect form because it shows P as a function of Q). Marginal revenue function: MR = 100 – Q (Notice that the slope of the MR function is...

A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost...

A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost curve for its product: Q = 200 - 2P MR = 100 - Q TC = 5Q MC = 5 a) suppose that a tax of $5 for each unit produced is imposed by state government. What is the profit maximizing level of output? b) suppose that a tax of $5 for each unit produced is imposed by state government. What is the price...

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