1. A monopolist serves market A with an inverse demand curve of P = 12 -...

1. A monopolist serves market A with an inverse demand curve of P = 12 - Q. Another monopolist serves market B with an inverse demand curve of P = 22 - 2Q. Suppose that both monopolists have a constant marginal cost of $2. What is the producer surplus earned by the monopolist serving market A?

2. A monopolist serves market A with an inverse demand curve of P = 12 - Q. Another monopolist serves market B with an inverse demand curve of P = 22 - 2Q. Suppose that both monopolists have a constant marginal cost of $2. What is the producer surplus earned by the monopolist serving market B?

3, A monopolist serves market A with an inverse demand curve of P = 12 - Q. Another monopolist serves market B with an inverse demand curve of P = 22 - 2Q. Suppose that both monopolists have a constant marginal cost of $2. Using your answers from the previous two questions, which producer surplus is higher (in market A or market B) and why?

Expert Solution

Rahul Sunny answered 1 year ago

A monopolist serves market A with an inverse demand curve of P = 12 – Q....

A monopolist serves market A with an inverse demand curve of P = 12 – Q. The marginal cost is constant at $2. Suppose the monopolist uses a two-part tariff pricing. What price does the monopolist set? What is the entrance fee? What is the deadweight loss? What is consumer surplus?

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...

A profit-maximizing monopolist operates in market with an inverse demand curve given by P = 20...

A profit-maximizing monopolist operates in market with an inverse demand curve given by P = 20 − Q and an associated marginal revenue MR = 20 − 2Q. Their marginal cost of production is constant at MC = 4. Assume for now that they have to sell each unit of output for the same price. a) Find the monopolist’s optimal choice of output and the socially efficient output. b) Sketch demand, marginal revenue, and marginal cost. Indicate on your diagram...

A monopolist faces a market (inverse) demand curve P = 50 − Q . Its total...

A monopolist faces a market (inverse) demand curve P = 50 − Q . Its total cost is C = 100 + 10Q + Q2 . a. (1 point) What is the competitive equilibrium benchmark in this market? What profit does the firm earn if it produces at this point? b. (2 points) What is the monopoly equilibrium price and quantity? What profit does the firm earn if it produces at this point? c. (2 points) What is the deadweight...

2. The inverse demand curve of a monopolist is given by: P = 200 −...

2. The inverse demand curve of a monopolist is given by: P = 200 − Q and the marginal cost is constant at $10, how does charging the monopoly a specific tax of τ=$12 per unit affect the monopoly optimum and the welfare of consumers, the monopoly, and society (where society's welfare includes the tax revenue)? Calculate the following: equilibrium price and quantity before the tax equilibrium price and quantity after the tax the change in consumer surplus the...

If P=36-Q is the inverse demand curve and AC=MC=12 then under a monopolist CS=........, PS=........ and...

If P=36-Q is the inverse demand curve and AC=MC=12 then under a monopolist CS=........, PS=........ and DWL=............

Monopoly with linear inverse demand. Consider a monopolist facing a linear inverse demand curve p(q)= a-...

Monopoly with linear inverse demand. Consider a monopolist facing a linear inverse demand curve p(q)= a- bq, and cost function C(q)= F + cq, where F denotes its fixed costs and c represents the monopolist's (constant) magical cost a>c 1. Graph demand, marginal revenue and marginal cost. Label your graph carefully, including intercepts 2. Solve the profit maximizing output q^m. To do this, first write down the expression for MR=MC and solve for the optimal quantity. Next find the price...

A monopolist sells in a market described by the inverse demand function p = 10 -...

A monopolist sells in a market described by the inverse demand function p = 10 - 0.1Q , where p is the price and Q is the total quantity sold. The monopolist produce its output in two plants which have the cost functions C 1 = 0.25q 1 and C 2 = 0.5q 2 , where q i (i=1,2) is the output produced in plant i (of course,...

The inverse market demand curve for a good is p = 120 – 0.25Q and the...

The inverse market demand curve for a good is p = 120 – 0.25Q and the inverse market supply curve for the good is p = 50 + 0.45Q. Calculate the equilibrium price and quantity, consumer surplus and producer surplus.

The inverse market demand curve is P = 170 – 4Q. Two firms in this market...

The inverse market demand curve is P = 170 – 4Q. Two firms in this market are evenly splitting the output. Each firm produces the product at a constant marginal cost of $10. Which of the following statements is TRUE? I. If one firm produces 2 more units of output, its profits will rise to $864. II. If neither firm cheats, each firm will earn a profit of $800. III. If one firm produces 3 more units of output, the...

Question