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 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

A monopolist faces the following demand curve: P = 400 - 3Q, its total cost is...

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A monopolist faces a demand of P = -3Q + 400. The monopolist’s marginal cost is...

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A monopolist faces a market demand curve given by QD= 100 – P/3 and has a...

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Assume that a monopolist faces a demand curve given by: Q = 100 – P Also...

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

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A monopolist faces a demand curve of P = 120 – Q, and has costs of...

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Suppose the monopolist has a cost function of TC=2q^2+20Q+40, and faces a market demand of P=300-3Q....

Suppose the monopolist has a cost function of TC=2q^2+20Q+40, and faces a market demand of P=300-3Q. a) In order to maximize profits, how much should the firm produce? b) What price should the monopolist charge? c) How much is the consumer surplus in this case? d) How much is the producer surplus?

Suppose that a firm faces the demand curve, P = 100 - 3Q, where P denotes...

Suppose that a firm faces the demand curve, P = 100 - 3Q, where P denotes price in dollars and Q denotes total unit sales. The cost equation is TC = 200 + 22Q. a. Determine the firm’s profit-maximizing output and price. b. Suppose that there is a change in the production process so that the cost equation becomes TC = 80 + 12Q + Q2. Determine the resulting effect on the firm’s output: c. Using the two...

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