Question
In: Economics
5. A monopolist faces a demand curve P = 64−2Q. His marginal cost is MC =...
5. A monopolist faces a demand curve P = 64−2Q. His marginal cost is MC = 16.
(a) Draw a graph to illustrate and calculate the profit maximizing output and price.
(b) Calculate the efficient level of output and the DWL.
(c) Suppose the government gave the monopolist a subsidy of $4 per unit produced. Compute the profit maximizing output level and the deadweight loss associated with this new output. Explain intuitively why the DWL has changed.
Solutions
Rahul Sunny answered 2 years agoRelated Solutions
Suppose that a monopolist whose marginal cost curve is MC(Q)=Qfaces the demand curve P=10-2Q.
Suppose that a monopolist whose marginal cost curve is MC(Q)=Q
faces the demand curve P=10-2Q. What is monopolist's
profit-maximizing quantity, profit-maximizing price, the total
surplus (under monopoly profit maximization), also called the
"monopoly market surplus," and if the monopolist can perfectly
price discriminate, then deadweight loss equals...?
A monopolist with marginal cost of MC=Q faces a demand curve of QD = 20 -...
A monopolist with marginal cost of MC=Q faces a demand curve of
QD = 20 - 2P. This implies that P = 10 - (1/2)Q and that the
marginal revenue is MR = 10 - Q. a. Sketch demand, marginal
revenue, and marginal cost curves. b. What quantity and price will
the monopolist set? c. What quantity and price would the monopolist
set if it produced at the efficient market outcome where P=MC? d.
Identify the CS, PS and DWL...
5. A monopolist faces inverse demand P= 30−4Q and has constant marginal cost MC= 6. Currently...
5. A monopolist faces inverse demand P= 30−4Q and has constant
marginal cost MC= 6. Currently the government provides a per-unit
subsidys to the firm.
i. What is the quantity provided by the monopolist as a function
of subsidys?What price does the monopolist charge?
ii. What is the size of the per unit subsidys for which the
monopolist will produce the socially efficient quantity? How much
deadweight loss is saved by this subsidy?
What is the total payment that the...
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 monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost...
A monopolist faces the following demand curve, marginal revenue
curve, total cost curve and marginal cost curve for its
product:
Q = 200 - 2P MR = 100 - Q TC = 5Q MC = 5
a) suppose that a tax of $5 for each unit produced is imposed by
state government. What is the profit maximizing level of
output?
b) suppose that a tax of $5 for each unit produced is imposed by
state government. What is the price...
A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost...
A monopolist faces the following demand curve, marginal revenue
curve, total cost curve and marginal cost curve for its product: Q
= 200 ; MR = 100-Q ; TC = 5Q ; MC = 5
a) Suppose that a tax of $5 for each unit produced is imposed by
state government. What is the profit maximizing level of
output?
b) Suppose that a tax of $5 for each unit produced is imposed by
state government. What is the profit maximizing...
A monopolist faces the following demand curve, marginal revenue, total cost curve and marginal cost curve...
A monopolist faces the following demand curve, marginal revenue,
total cost curve and marginal cost curve for its product: Q = 200 -
2P ; MR = 100 - Q ; TC = 5Q ; MC = 5
a) What level of output maximizes total revenue?. b) What is the
profit maximizing level of output?. c) What is the profit
maximizing price?. d) How much profit does the monopolist earn? e)
Suppose that a tax of $5 for each unit...
A monopolist faces the following demand curve, marginal revenue curve, total cost curve and marginal cost...
A monopolist faces the following demand curve, marginal revenue
curve, total cost curve and marginal cost curve for its product: Q
= 200 - 2P MR = 100 - Q TC = 5Q MC = 5 a. What is the profit
maximizing level of output? (10 pts.) b. What is the profit
maximizing price? (8 pts.) c. How much profit does the monopolist
earn? (10 pts.)Immersive Reader (28 Points)
A monopolist has a marginal cost curve MC=Q and a home market demand P=30-Q. The monopolist...
A monopolist has a marginal cost curve MC=Q and a home market
demand P=30-Q. The monopolist can also sell in a foreign market at
a price pf Pf=12. Find and graph the quantity produced, quantity
sold at home, and quantity sold in the foreign market, as well as
the price charged at-home market. Explain why the monopolist's
profits would fall if it were to produce the same quantity but sell
more in the home market.
A monopolist faces an inverse demand of P(Q) = 250−2Q and constant marginal costs. a) Calculate...
A monopolist faces an inverse demand of P(Q) = 250−2Q and
constant marginal costs.
a) Calculate the optimal price, quantity and total revenues, for
MC = 10 and MC = 30.
b) Repeat question a) under perfect competition with constant
marginal costs for MC = 10 and MC = 30.
c) Discuss how the marginal cost increase from 10 to 30 affects
revenue in the monopoly case vs perfect competition. Relate your
answer to the price elasticity of demand
d)...
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