Question
In: Economics
Consider a monopolist power plant with total costs 2Q^2 , where costs and prices are given...
Consider a monopolist power plant with total costs 2Q^2 , where costs and prices are given in dollars. The demanders for power have a demand curve given by
QD(P) =18 − P.
What is the equilibrium price, quantity, consumer surplus, and producer surplus? (5
pts)
Suppose that if this monopolist did not exist, another monopolist with the same cost
would replace it. What is the marginal product of the original monopolist? Is that
greater than or equal to the surplus the original monopolist receives? (10 pts)
Now suppose the replacement monopolist has total costs 27 Q2 . What is the marginal
product of the original monopolist? Is that greater than or equal to the surplus the
original monopolist receives? (10 pts)
Now suppose the monopolist has no possible replacement. What is the marginal
product of the original monopolist? Is that greater than or equal to the surplus the
original monopolist receives? (10 pts)
Consider again the situation on part d with no possible replacement. Suppose that
power has a social cost of X dollars per unit produced because of the pollution generated. Each unit produced creates a negative externality. At what X , does the
monopolist’s marginal product equal its surplus? That is, at what size of an externality, is the market with a monopolist efficient? (15 pts)
Solutions
Rahul Sunny answered 1 year agoRelated Solutions
Consider a representative firm with the total costs of TC=16+Q^2 (and marginal costs of 2Q, MC=2Q)...
Consider a representative firm with the total costs of TC=16+Q^2
(and marginal costs of 2Q, MC=2Q) . The market demand curve is
given by P=36-1/2Q and the starting market price is $18
1. Graph the starting scenario using comparative statistics
2. Why is this not a long run equilibrium?
3. What happens in order to transition to the long run?
4. Graph the long run equilibrium using comparative
statistics
5. How many firms are in the market in the long...
Consider a firm with total costs represented by TC=16+Q^2 and a corresponding marginal cost of 2Q...
Consider a firm with total costs represented by
TC=16+Q^2 and a corresponding marginal cost of 2Q
(MC=2Q)
1). Graph the ATC and MC, be certain to label the lowest point
of the ATC.
Consider that firm faces a price of 12$.
2). Find the optimal quantity.
3). Graph and find the total cost, total revenue, and any profit
or loss at the optimal quantity.
Consider a firm with total costs represented by TC=16+Q^2 and a corresponding marginal cost of 2Q...
Consider a firm with total costs represented by TC=16+Q^2 and a
corresponding marginal cost of 2Q (MC=2Q)
1. Graph the ATC and MC, be certain to label the lowest point of
the ATC.
Consider that firm faces a price of 12$.
2. Find the optimal quantity.
3. Graph and find the total cost, total revenue, and any profit
or loss at the optimal quantity.
Consider a firm with total costs represented by TC=16+Q^2 and a corresponding marginal cost of 2Q...
Consider a firm with total costs represented by TC=16+Q^2 and a
corresponding marginal cost of 2Q (MC=2Q)
1. Graph the ATC and MC, be certain to label the lowest point of
the ATC.
Consider that the firm faces a price of $12.
2. Find the optimal quantity
3. Graph and find the total cost, total revenue and any profit
or loss at the optimal quantity
4. Consider a firm with total cost: TC = 200 +2q + 4q2, where q is...
4. Consider a firm with total cost: TC = 200 +2q + 4q2, where
q is output. (Decimals OK!)
a.[1] Is this a Short Run or a Long Run Total Cost function?
Explain how you know.
b.[3] Find the equations for Marginal Cost, Average Total Cost
and Average Variable Cost.
c.[2] What is the minimum efficient scale of production for
this firm?
d.[1] Over what quantities does this firm exhibit diseconomies
of scale?
e.[4] If this represents the cost curve...
II. Consider a monopolist where the market demand curve for the produce is given by P...
II. Consider a monopolist where the market demand curve for the
produce is given by P = 520 – 2Q. This monopolist has marginal
costs that can be expressed as MC = 100 + 2Q and total costs that
can be expressed as TC = 100Q + Q2 + 50.
a. Given the above information, what is this monopolist’s profit
maximizing price and output if it charges a single price?
b. Given the above information, calculate this single price
monopolist’s...
Consider a Monopolist where the inverse market demand curve for the produce is given by P...
Consider a Monopolist where the inverse market demand
curve for the produce is given by
P = 520 − 2Q. Marginal Cost: MC =100 + 2Q and Total Cost: 100
.50
2
TC = Q + Q +
[1 + 1 + 1 = 3]
Calculate:
(a) Profit Maximizing Price and Quantity.
(b) Single Price Monopolist Profit.
(c) At the profit maximizing quantity, what is the Average Total
Cost (ATC) for the
Consider a Monopolist where the inverse market demand...
Suppose that the industry demand curve is given by P = 120 – 2Q. The monopolist/incumbent...
Suppose that the industry demand curve is given by P = 120 – 2Q.
The monopolist/incumbent faces MCM=ACM=40. a)
a) Solve for the profit-maximizing level of monopoly output,
price, and profits.
b) Suppose a potential entrant is considering entering, but the
monopolist has a cost advantage. The potential entrant faces costs
MCPE=ACPE=60. Assuming the monopolist/incumbent continues to
produce the profit-maximizing quantity from part a), solve for the
residual demand curve for the entrant.
c) Assume the potential entrant follows the...
A monopolist has its total costs (TC ) of production given in Table 4. The (inverse)...
A monopolist has its total costs (TC ) of production given in
Table 4. The (inverse) demand curve it faces in the market is
described by this equation: P = a − bQ = 5, 000 − (40)Q.
Q
TC
Q
TC
0
800
21
13345.4
`1
1181.4
22
14827.2
2
1531.2
23
16453.8
3
1857.8
24
18233.6
4
2169.6
25
20175
5
2475
26
22286.4
6
2782.4
27
24576.2
7
3100.2
28
27052.8
8
3436.8
29
29724.6
9
3800.6...
A monopolist has its total costs (TC ) of production given in Table 3. The (inverse)...
A monopolist has its total costs (TC ) of production
given in Table 3. The (inverse) demand curve it faces in the market
is described by this equation:
P = a − bQ = 3, 000 − (31.15)Q.
Table 3: Total Costs for a Monopolist
Q
TC
Q
TC
0
800
21
6243.2
1
1131.2
23
6977.6
2
1409.6
23
7810.4
3
1642.4
24
8748.8
4
1836.8
25
9800
5
2000
26
10971.2
6
2139.2
27
12269.6
7
2261.6
28...
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