An industry produces its product, Scruffs, at a constant marginal cost of $50. The market demand...

An industry produces its product, Scruffs, at a constant marginal cost of $50. The market demand for Scruffs is equal to

Q=75,000−500PQ

What is the value to a monopolist who is able to develop a patented process for producing Scruffs at a cost of only $45? $_____________

If the industry producing Scruffs is purely competitive, what is the maximum benefit that an inventor of a process that will reduce the cost of producing Scruffs by $5 per unit can expect to receive by licensing her invention to the firms in the industry? $________________

Expert Solution

complete answer is given in picture. Give it a thumbs up

Thank you!

Rahul Sunny answered 1 year ago

A monopolist produces a product with a constant marginal cost equal to $400 per unit and...

A monopolist produces a product with a constant marginal cost equal to $400 per unit and a fixed cost of $80000. The demand for the product is Q= 500-0.5*P. The monopolist’s maximal profits are equal to a) $0.00 b) $5000.00 c) $45000.00 d) None of the above.

When marginal product is increasing: Marginal cost is increasing c. marginal cost is constant Marginal cost is...

When marginal product is increasing: Marginal cost is increasing c. marginal cost is constant Marginal cost is decreasing d average product is decreasing

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

A producer of athletic shoes produces all of its basketball shoes at a constant marginal cost...

A producer of athletic shoes produces all of its basketball shoes at a constant marginal cost of $50 per pair. It sells a brand-name version of the shoe with a basketball star endorsement to one market (A) and an identical “discount” brand version to another separate market (B). The demand for the shoes in each market is given by: QA = 100 – 0.2p QB = 40 – 0.4p What is the price per pair in the brand-name market (A)...

Consider an industry in which all firms have constant marginal costs of 50, MC = 50,...

Consider an industry in which all firms have constant marginal costs of 50, MC = 50, and market demand is Qd = 385 - 0.5P (a) If there are two firms operating as Cournot duopolists, find the equilibrium price and total quantity (b) If there are two firms operating as Stackelberg duopolists, find the equilibrium price, how much the leader firm produces and how much the follower firm produced?

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.

In a homogeneous product duopoly, each firm has constant marginal cost equal to 10. The market...

In a homogeneous product duopoly, each firm has constant marginal cost equal to 10. The market inverse demand curve is p = 250 – 2Q where Q = q1 + q2 is the sum of the outputs of firms 1 and 2, and p is the price of the good. Marginal and average cost for each firm is 10. Word limit per question: 400 words (200 words per part of question) (a) What are the Cournot and Bertrand equilibrium quantities...

Assume a constant cost industry. Assume it is a competitive market and that the market is...

Assume a constant cost industry. Assume it is a competitive market and that the market is in a long-run equilibrium. Graph this.Show what happens in both the short run and the long run if the government imposes a one-time tax of $200 on each firm. That is, no taxes will ever again be imposed. What if the firm does not believe that no taxes will ever again be imposed, could this change your analysis? Show graph as well

A monopolist produces gizmos at constant marginal cost of 4 and no fixed cost. It recognizes...

A monopolist produces gizmos at constant marginal cost of 4 and no fixed cost. It recognizes that it has two types of customers. The demand curve of each type of customer is given by: Type-1 customer: ( ) p1 q1 = 18 − 2q1 Type-2 customer: ( ) p2 q2 =15 − q2 where qi (i = 1, 2) are the quantity demanded of type i consumer per period. While the monopolist knows the demand curves, it cannot identify the...

Suppose a monopoly with constant marginal cost of 10 sells its product to identical consumers. Each...

Suppose a monopoly with constant marginal cost of 10 sells its product to identical consumers. Each consumer has an inverse demand curve given by P = 210 − 10Q. (a) Find the price and quantity the monopolist chooses if it can only set one price, and it can not use a two-part tariff. What is the monopolist’s profit on each consumer? (b) Now suppose the monopolist can use a two-part tariff. What is the profit maximizing choice of the fixed...

Question