Consider a monopolist that operates on two. The total demand on the first market is D1(p1)...

Consider a monopolist that operates on two. The total demand on the first market is D1(p1) = 80 − p1. The total demand on the second market is D2(p2) = 40 − p2. Let the cost function be C(q) = 20q.
1. (a) Suppose the monopolist cannot price discriminate , i.e., it faces a single demand D(p) = D1(p) + D2(p). Find the optimal price and quantity on each market, total monopoly profit, consumer surplus, and total surplus.
2. (b) Suppose the monopolist can charge a different price on each of the two mar- kets. Find the optimal price and quantity on each market, total monopoly profit, consumer surplus, and total surplus.
3. (c) Suppose that the monopolist can separate the markets and practice perfectprice discrimination within each market. Find the quantity traded on each market, total monopoly profit, consumer surplus, and total surplus.

Solutions

Expert Solution

Rahul Sunny answered 5 months ago

Next > < Previous

Related Solutions

A monopolist operates in a market of demand q = 10−p with a total cost of...

A monopolist operates in a market of demand q = 10−p with a total cost of C(Q, e) = (3/2)e^2 +(5−e)Q, where e represents effort. a. Calculate the price, effort, quantity, and welfare that results from an unregulated monopoly. b. A regulator establishes that price must equal marginal cost. The monopolist is free to select the level of effort. Calculate price, effort, quantity, and welfare in this situation. c. A regulator decides to force price equal to marginal cost and...

Part 1: Spatial Equilibrium The demand in market 1 is D1 = 24 - P1 The...

Part 1: Spatial Equilibrium The demand in market 1 is D1 = 24 - P1 The supply in market 1 is S1 = -2 + P1 The demand in market 2 is D2 = 16 - P2 The supply in market 2 is S2 = 2 + P2 1. If no trade occurs between the markets, what are the equilibrium values of D1, S1, P1, D2, S2, and P2? Solve algebraically. 2. If the cost of transportation between the two...

Show all your calculations. Telstra is a monopolist. Suppose it operates at the market with demand...

Show all your calculations. Telstra is a monopolist. Suppose it operates at the market with demand P = 10 – Q and has the following cost structure: MC=AC = 2. Draw the market demand curve and the marginal cost curve on the graph with Q on X-axis. (Include a large and accurate graph). a. Suppose Telstra is only allowed to charge a single price per unit of their services. Derive the marginal revenue and draw it on your graph. Calculate...

A monopolist has two segmented markets with demand curves given by P1 = 160- Q1 and...

A monopolist has two segmented markets with demand curves given by P1 = 160- Q1 and P2 = 130 - 0.5Q2 where p1 and p2 are the prices charged in each market segment, and Q1 and Q2 are the quantities sold. Its cost function is given by c(Q) = 2Q2, where Q = Q1 + Q2. a. What type of price discrimination does this entail? b. Find the monopolist's profit-maximizing price and quantity for each segment. c. What is the...

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 single market with the following demand curve and total cost P =...

A monopolist faces a single market with the following demand curve and total cost P = 180 – 2.5Q and TC = 2Q2 i. Determine the quantity of output that it should produce and the price it should charge to maximize profit. Then, calculate the profit.

Suppose a monopolist faces two groups of consumers. Group 1 has a demand given by P1...

Suppose a monopolist faces two groups of consumers. Group 1 has a demand given by P1 = 50−2Q1 and MR1 = 50−4Q1. Group 2 has a demand given by P2 = 40−Q2 and MR2 = 40−2Q2. The monopolist faces MC=AVC=ATC=$10 regardless of which group she supplies to. We can infer from the demand equations that in equilibrium Group __ is the inelastic group because the elasticity at that point is __ in absolute value than that of the other group....

A monopolist facing a market demand Q = 240 – 2p has the total cost function...

A monopolist facing a market demand Q = 240 – 2p has the total cost function TC(q) = q2. 1. What is the monopolist’s profit maximizing quantity and price? How many units are produced in each plant? Now the government notices that the monopolist is actually composed of two production plants, the first plant has a total cost function TC1(q) = 2q^2+ 16q 2. Derive the marginal cost of the second plant, MC2(q).

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...

II. Consider a monopolist where the market demand curve for the produce is given by P...

II. Consider a monopolist where the market demand curve for the produce is given by P = 520 – 2Q. This monopolist has marginal costs that can be expressed as MC = 100 + 2Q and total costs that can be expressed as TC = 100Q + Q2 + 50. a. Given the above information, what is this monopolist’s profit maximizing price and output if it charges a single price? b. Given the above information, calculate this single price monopolist’s...

Subjects