A monopoly confronts the (market) inverse demand function Pp(q) = The monopoly's ost of producing q units of the output is C(q) = q. We assume that the monopoly maximizes its profit. Find the price and the quantity of the utput that the monopoly will choose.
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- Imagine that you ale managing a small firm and thinking about entering the market of a monopolist. The monopolist is currently charging a high price, and you have calculated that you can make a nice profit charging 10 less than the monopolist. Before you go ahead and challenge the monopolist, what possibility should you consider for how the monopolist might react?What is a natural monopoly?Imagine a monopolist could charge a different price to every customer based on how much he or she were willing to pay. How would this affect monopoly profits?
- Can you think of any examples of successful predatory pricing in the real world?Suppose a firm is a monopoly. Its marginal cost curve is flat, and its average cost curve is downward sloping (because it has a fixed cost). 1.) Using the point drawing tool, indicate the monopoly's profit-maximizing price and quantity in the figure if it cannot price discriminate. Label this point' e,. '2.) Using the rectangle drawing tool, indicate the monopoly's losses at the no price discrimination profit-maximizing price and quantity. Label this rectangle 'Losses,. 3.) Using the point drawing tool, indicate the monopoly's profit-maximizing quantity in the figure if it perfectly price discriminates and the price charged for the last unit produced. Label this point' e2. '4.) Using the triangle drawing tool, indicate the monopoly's producer surplus with perfect price discrimination. Label this triangle PS, . ' Carefully follow the instructions above, and only draw the required objects. 2 Suppose a firm is a monopoly. Its marginal cost curve is flat, and its average cost curve is…2. Suppose the cost function for a monopoly is given by TC =F+c.q where TC is the total cost, F is the fixed cost and q is the output of the firm. The demand function for the monopoly is given by q = A-bP where A > 0 and b > 0. Find out the profit maximizing price, quantity, and profit for the monopoly. Also find out the expression for the marginal revenue of the monopoly as well as the elasticity of demand facing the monopoly.
- 4. Consider a monopoly facing the demand Q = 100-5P with the cost function C = 100+2q². a Find the monopoly price and monopoly output. b Find the monopoly profit in the short run. с Will there be adjustment in the long run? Discuss.O OO The above graph shows the market demand function for a product. Assume that the market is served by a perfectly-price-discriminating monopolist with a constant marginal cost of production equal to $4 (MC = $4) and no fixed cost (FC = 0). The deadweight loss equals: DWL - $72 DWL - $0 DWL- -$48 DWL - $84 DWL-$36 $30 $28 $26 $24 $22 $20 Question 23 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15Suppose Jack and Jill have hair the same length but the local barber charges Jack $2 less because he is a guy to encourage him to use his services. This is an example of... Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a b с d Question 1 e 1st Degree Price Discrimination 2nd Degree Price Discrimination 3rd Degree Price Discrimination 4th Degree Price Discrimination Bundling Saved Question 2 Which of the following best describes a natural monopoly? MacBook Pro
- Price and cost (dollars per subscription) 64.00 58.00 48.40 40.00 MR MC ATC D 32 80 Quantity of cable subscriptions (per month in thousands) QDraw the graph. If the monopoly is a doing perfect price discrimination, then: the monopoly produces a quantity Q = ______ where ________________ (which curves intersect?) the monopoly charges a price of ________ (trick question!!!!) the consumer surplus is CS = ______. the producer surplus is PS = _________(identify the area on the graph and calculate it). this monopoly ________ (is / is not) efficient because ______________________.Draw an example of a monopoly with a linear demand curve and a constant marginal cost curve. a. Show the profit-maximizing price and output and and identify the areas of consumer surplus, producer surplus, and deadweight loss. Also show the quantity that would be produced if the monopoly were to act like a price taker. b. Now suppose that the demand curve is a smooth concave-to-the-origin curve (whose ends hit the axes) that is tangent to the original demand curve at the point Explain why the monopoly equilibrium will be the same as with the linear demand curve. Show how much output the firm would produce if it acted like a price taker. Show how the welfare areas change. c. Repeat the exercises in part b if the demand curve is a smooth convex-to-the-origin curve (whose ends hit the axes) that is tangent to the original demand curve at the point