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- Cost & Figure 15 Revenue $10 per unit MC $9 $8 АТС $7 $6 $5 $4 $3 $2 $1 MR 2 3 4 7 8 10 Quantity (in thousands) Refer to the above Figure 15 which shows cost curves, a marginal revenue (MR) curve and a demand curve faced by a monopolist. If this monopolist is profit maximizing and does not price discriminate, it will produce ( Select ] v units of output and charge a price of [ Select ] per unit. Given its cost curves, we can tell that this monopolist is currently earning [ Select ] economic profit. According to the classical welfare economics, the socially efficient quantity to be produced in this market would be [ Select ] units of output and a socially efficient price would be [Select ] per unit.Refer to the diagram to the right which shows the demand and cost curves facing a monopolist. MC Suppose the monopolist represented in the diagram to the right produces positive output. What is the profit maximizing/loss - minimizing output level? ATC 75 O A. 880 units B. 630 units C. 850 units D. 800 units 68 54 38 630 800 s80 850 MR Quantity Price and cost per unit ($)28 $55 $50 $45 MC АТС I of $40 $35 $30 $25 $20 Demand = P $15 $10 $5 $0 MR 40 80 120 160 200 240 Output (Q) The diagram above shows the Demand, MR, and cost curves for a monopolist in the short-run. At the profit maximizing Output (Q) level, the monopolist will earn a Total Profit of: Sel one: а. $1,200 b. $2,200 c. $800 d. $2,000 $$
- Spring 2022 Micro Practice Final X 17. Figure: Monopoly Profits 1 $16.50 Marginal cost Average 6. cost ND 40 80 100 Marginal revenue What is the monopolist's optimal price and output level? P = $3.00; Q = 40 OP= $16.50; Q = 40 c. P = $6.00; Q = 40 d. P = $6.00; Q= 8012) Suppose that a monopolist supplies a product in two distinct markets, LA and NY. The demand functions for the two markets are PLa = 65 – 3QLA and Pvy = 50 – 5QNY. The monopolist has a fixed cost of $10 and a constant marginal cost of $5 per unit. a. If segmenting is feasible, what are the profit-maximizing prices, quantities, and maximized profit? b. If segmenting is NOT feasible, what is the profit-maximizing price, quantity, and maximized profit? c. How much is the difference in total consumer surplus in the two cases? Which case makes consumers better off?A monopolist can sell three products, labelled A, B and C. All products are produced at the constant unit cost of SEK 10. There are three buyer types, whose WTPs are reported in Table 1. Show Transcribed Text # of buyers 30 40 30 Products TABLE 1 A B с 70 50 30 50 40 40 30 30 50 2.1. Suppose that the monopolist wishes to bundle product A with exactly one be- tween product B and product C. Which would be the most profitable of these two bundles? Is bundling the two products included in it actually more profitable than selling the products separately? 2.2. Can you provide an intuitive account for the ranking of the profitability of the two bundles established in 2.1? Show Transcribed Text Answer to Problem 2. Part 1. The profits from the two bundles are TAB= 4900 and 7AC = 6000. Hence, A should be bundled with C. The profit from the optimal bundle is greater than the sum of the profits realised by selling the two products independently, which is equal to TA + TC = 4900 (= πA + 7B). Part…
- Graph shows the cost and revenue information for Shitotsu the monopolist. What are the levels of price, output, total (sales) revenue. and total profits if the monopolist were to produce at the positions (a) through (d) indicated in table below? Costs and revenues 30 27 24 21 18 15 9 6 3 0 3 6 9 12 15 Quantity per period 18 21 MR D=AR MC AC4. Third-Degree Price Discrimination. A monopolist has two sets of customers: low demand and high demand. Suppose that the demand functions for both types of consumers are given by the following equations: QL-1600-2PL and Qu-4800 - P.The monopolist faces constant marginal cost of $200. Suppose that the monopolist can separate the two groups and charge separate, profit maximizing prices to each. Suppose that cannot discriminate between the two groups (Hint: be careful in your analysis and think of reservation prices) 1. What price will the monopolist set? 2. What is consumer surplus in this case?Amonopoly faces the demand curve 14- P= 12-100, 13- 12 where Pis measured in dollars per unit and Q in thousands of units. The monopolist has a constant average cost of $4 00 per unit 114 10 12 1- 6610 12 14 16 16 20 22 24 2 Quantity (thousands) A govemment regulatory agency sets a price celling of 56.00 per unit. What quantity will be produced, and what will the firm's profit be? The monopoly with the price celling will producethousand units of output
- Ref to the right-hand side graph to answer Q49 – Q50b. Price АТС 49. Suppose the monopolist represented in the diagram above produces positive output. (In other words, "no shutdown" and keep operating.) What is the price charged at the profit-maximizing/loss- minimizing output level? and cost per unit MC $75 68 63 A) $38 B) $54 C) $63 D) $68 E) $75 54 50. The monopolist profit (or loss) = $_ Note: Put “–" (minus) sign if the monopolist is losing money. 38 'Demand 50b. On the right-hand side graph, neatly shade a rectangle or triangle area that represents this monopolist's profit (or loss). 630 800 Quantity 880 850 MRlocal business that provides trash service for rural households has asked you to provide some advice on their pricing and production decisions. Since no other trash companies service this area, you believe they function as a monopoly. Price Quantity TC $1,000 0 $500 $800 5 $1,200 $600 10 $3,100 $400 15 $7,000 $200 20 $11,500 If they maximize their profits, what price will they charge? Question 18 options: $600 $200 $800 $40011. Problems and Applications Q5 Consider the relationship between monopoly pricing and price elasticity of demand. If demand is inelastic and a monopolist raises its price, total revenue would Therefore, a monopolist will 10 9 8 7 6 5 Use the purple segment (diamond symbols) to indicate the portion of the demand curve that is inelastic. (Hint: The answer is related to the marginal- revenue (MR) curve.) Then use the black point (plus symbol) to show the quantity and price that maximizes total revenue (TR). (?) 4 1 0 -1 -2 -3 -4 -5 0 Demand 1 2 3 4 5 Quantity Marginal Revenue and total cost would produce a quantity at which the demand curve is inelastic. 6 7 8 9 10 Inelastic Demand , causing profit to Max TR