Question

In: Economics

Multi-plant monopolist: A monopolist has access to two production processes with the following marginal cost curves:...

Multi-plant monopolist: A monopolist has access to two production processes with the following marginal cost curves: MC1 = 0:8x and MC2 = 64+ 0:2y, where output in production process 1 is x, output in production process 2 is y and hence total output produced is Q = x + y:

(a) During peak season, the monopolist faces the following demand curve: P = 320 1:2Q: How much should he produce at each facility to maximize profits? What would be his proÖt-maximizing price?

(b) During off season, the monopolist faces a reduced demand given by: P = 1921:2Q: How much should he produce at each facility to maximize profits? What would be his profit-maximizing price?

Solutions

Expert Solution

Rahul Sunny answered 1 year ago
Next > < Previous

Related Solutions

4. Multi-plant monopolist: A monopolist has access to two production processes with the following marginal cost...
4. Multi-plant monopolist: A monopolist has access to two production processes with the following marginal cost curves: MC1 = 0:8x and MC2 = 64+ 0:2y, where output in production process 1 is x, output in production process 2 is y and hence total output produced is Q = x + y: (a) During peak season, the monopolist faces the following demand curve: P = 320 1:2Q: How much should he produce at each facility to maximize profits? What would be...
7. Suppose a firm has access to two production processes with the following marginal cost curves:...
7. Suppose a firm has access to two production processes with the following marginal cost curves: MC1 = 2Q1 and MC2 = 3Q2 If it wants to produce 30 units of output, how much should it produce with each process? 8. Output for a simple production process is given by Q = 2KL, where K denotes capital and L denotes labor. The price of capital is $25 per unit and capital is fixed at 5 units in the short run....
1. A multi-plant monopolist will maximize profits where a. the marginal revenue in each plant is...
1. A multi-plant monopolist will maximize profits where a. the marginal revenue in each plant is equal to the marginal cost in this plant b. the marginal revenue of monopoly is equal to the marginal cost of each plant c. average cost is at its minimum in both plants d. none of the above
Suppose that a monopolist has a constant average total cost of production and marginal cost of...
Suppose that a monopolist has a constant average total cost of production and marginal cost of production equal to $6, and has a demand for its product represented as price quantity bought and sold (units) $10 1 $9 2 $8 3 $7 4 $6 5 Calculate the total and marginal revenue for each quantity produced and sold Find the profit-maximizing (optimal) quantity produced and sold and the price/unit. Calculate the profit or loss at the optimal quantity of production and...
3. A monopolist producing with a constant marginal cost of $8 has the following demand for...
3. A monopolist producing with a constant marginal cost of $8 has the following demand for its product. Price $20 $18 $16 $14 $12 $10 $8 Quantity 1 2 3 4 5 6 7 Find the optimal output, price and calculate the resulting monopoly profit.
3. A monopolist producing with a constant marginal cost of $8 has the following demand for...
3. A monopolist producing with a constant marginal cost of $8 has the following demand for its product. Price $20 $18 $16 $14 $12 $10 $8 Quantity 1 2 3 4 5 6 7 Find the optimal output, price and calculate the resulting monopoly profit.
A monopolist sells in two adjacent countriesand has a constant marginal cost of 20. The demand...
A monopolist sells in two adjacent countriesand has a constant marginal cost of 20. The demand in country 1 is Q1= 90 –P1, and the demand in country 2 is Q2= 150 –P2. Resale is not prohibited so the monopolist must deal with the two countries as one market.a. What is the equilibrium quantity, price,and profit?b. What is the price elasticity at the equilibrium price?c. Suppose resale is now prohibited so the monopolist can now practice price discrimination. What is...
A monopolist with a constant marginal cost of production of 10 maximizes its profit by choosing...
A monopolist with a constant marginal cost of production of 10 maximizes its profit by choosing to produce where the price elasticity of demand is –3. (Recall that MR = p(1 + 1/ε) where MR is marginal revenue, p is price and ε is the point price elasticity of demand.) A. If price is decreased (from its profit maximizing level) by a small amount, revenue of the monopolist will increase. B. If the monopolist’s fixed cost increases, its profit maximizing...
A monopolist (Firm 1) may be a low-cost type, with constant marginal cost of production 10,...
A monopolist (Firm 1) may be a low-cost type, with constant marginal cost of production 10, or a high-cost type, with constant marginal cost of 20, with probabilities p and 1-p respectively. It has no fixed cost. Only the monopolist knows his type. The game has two stages. In stage one, a potential entrant (Firm 2) with constant marginal cost of 15 decides whether to enter the market. Entry requires a fixed investment of $100. If Firm 2 enters the...
A monopolist sells in two states and has constant marginal cost MC =10. Demand in market...
A monopolist sells in two states and has constant marginal cost MC =10. Demand in market 1 is Q1 = 50- p1. Market 2 demand is Q2 = 90-1.5p2. a)      If the monopolist is unable to discriminate price, what would be the profit maximizing price and quantity? b)      If the monopolist can discriminate price between two states, what would the price and quantity in each market? c)      Calculate the demand elasticity of each market and explain the price strategy.
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT