Market demand is p=100-3x. The cost function of the monopolist is given by C(x)=150+5x. To reduce...

Market demand is p=100-3x. The cost function of the monopolist is given by C(x)=150+5x. To reduce DWL, the regulator is considering imposing a price ceiling to maximize efficiency. Which one will have a higher DWL (alternatively, which one will be LESS effective as lowering the DWL of monopoly)?

Expert Solution

Rahul Sunny answered 1 year ago

A monopolist faces a market demand curve of q=100-p. The monopolist’s cost function is given by...

A monopolist faces a market demand curve of q=100-p. The monopolist’s cost function is given by (q) = 3000 + 20q. a) If the monopolist can perfectly price discriminate, how many units will be sold? b) If the monopolist can perfectly price discriminate, how much consumer surplus will there be? c) If the monopolist cannot price discriminate, how much consumer surplus will there be? (For this question, think long run.)

A monopolist faces a market demand curve given by P(y)=100-y. Its cost function is C(y)=y2+20. a)...

A monopolist faces a market demand curve given by P(y)=100-y. Its cost function is C(y)=y2+20. a) Find its profit-maximizing output level and market price. b) Calculate its total revenue, total cost and profit at that output. c) Calculate CS, PS and DWL? d) What is the efficient amount of output? e) Plot the graph for this monopolist indicating P(y), MR, MC, y*, p(y*), CS, PS, and DWL.

A monopolist with the cost function C(q) = q faces the market demand curve p =...

A monopolist with the cost function C(q) = q faces the market demand curve p = 101 -2q. What is the maximum amount the monopolist is willing to pay for advertising that shifts its demand curve to p = 101-q?

A monopolist faces a market demand: P = 200 – Q. The monopolist has cost function...

A monopolist faces a market demand: P = 200 – Q. The monopolist has cost function as C = 1000 + Q2, and marginal cost MC = 2Q. ( 1) Solve for Marginal Revenue (MR) function. (2) Find the profit-maximizing quantity? Profit? (3) Suppose the monopolist decides to practice 3rd degree price discrimination. Without solving for the 3rd degree price discrimination, can you compare the new profit earned by the monopolist with the old profit?

The market demand function for a monopolist is p=58-2Q and its cost is C(Q)=10Q. a) Determine...

The market demand function for a monopolist is p=58-2Q and its cost is C(Q)=10Q. a) Determine the monopolist’s price and quantity in equilibrium. b) Suppose now that a competition authority forces the monopolist to employ marginal cost pricing. Determine the price and the quantity with this new pricing scheme. c) Compute and compare the consumer surplus, the firm’s profit, and the social welfare under unrestricted monopoly and under marginal cost pricing. What is the deadweight loss due to unrestricted monopoly pricing?

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

A monopolist faces a market demand curve given by QD= 100 – P/3 and has a cost function described by C = 30Q +1.5Q2. Solve for the monopolist’s profit maximizing output and price. With reference to question 4 above, suppose the demand facing the monopolist increases to QD= 120 – P/2. Solve for the new profit maximizing values of price and quantity. Describe how the two answers differ and explain those differences in terms of the demand change. The market...

A monopolist has a cost function given by c(?)=?2 and faces a demand curve given by...

A monopolist has a cost function given by c(?)=?2 and faces a demand curve given by P(?)=120−y. (a)What is its profit-maximizing level of output? What price will the monopolist charge? (b)Calculate the deadweight loss imposed by the monopolist. Show also the deadweight loss in a graph (c)If you put a lump sum tax of $100 on this monopolist, what would its output be? (d)Suppose that you put a specific tax on the monopolist of $20 per unit output. What would...

1. Assume the market demand function is D(P)=100 – P and the firm cost function is...

1. Assume the market demand function is D(P)=100 – P and the firm cost function is C(q)= 20q. The industry is populated by many small firms that offer identical products. In the absence of regulation, a competitive equilibrium would be achieved. However, regulation is in place and requires that a firm’s price be at least as great as 30. Derive the effect of regulation on quantity, firm profits, and social welfare. 2. Now think that the industry is deregulated. What...

Acme is a monopolist who faces inverse market demand function P (Q, y) = 100 -...

Acme is a monopolist who faces inverse market demand function P (Q, y) = 100 - 2Q + y, where y is the quality level of Acme’s product. Acme has cost function function C(Q) = 20Q. Suppose quality is costly. Specifically, assume that Acme must pay innovation cost I(y)= (1/4)(y^2). Thus, Acme’s total profits are x(Q,y)=P(Q,y)Q - C(Q) - I(y). Assuming Acme is allowed to act like a monopolist, we will work out Acme’s optimal quality choice, y*. 1. Suppose,...

The cost function C and the price-demand function p are given. Assume that the value of...

The cost function C and the price-demand function p are given. Assume that the value of C(x) and p(x) are in dollars. Complete the following. C(x) = x2 100 + 7x + 2000; p(x) = − x 40 + 5 (a) Determine the revenue function R and the profit function P. R(x) = P(x) = (b) Determine the marginal cost function MC and the marginal profit function MP. MC(x) = MP(x) = Here is a picture of the problem: https://gyazo.com/6ce694b737f7dd4cfb20fbb9d1917420

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