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
Rahul Sunny answered 1 year agoRelated 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 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...
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