The following figure shows the demand for monopolists Price 20 10- 0 Quantity a) 60 b) 59 c) 96 d) 62 Assume that the monopoly has two plants-plant 1 and plant 2. Cost function is given for plant c₁(q) =2+4qifq; > 0 1. i=1,2. c,(q) = 0,otherwise Find the optimal profits. 10 20
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- A monopolist's demand function is given by D(p) = 90 – 2p. This - monopolist is facing a cost function, C(y) = (1/2)y² + 600. (a) Is this a natural monopoly? Explain. (b) How can government regulate this monopolist to produce the efficient amount of products?part b please A movie theater as a local monopoly faces two groups of moviegoers, students and nonstudents. The students’ demand function for movie tickets is Qs = 200 − 20ps, and thenon-students’ demand function is Qn = 100 − 5pn. The theater incurs zero marginalcost of serving additional customer, but there is a fixed cost of showing a movie at $100.(a) The movie theater charges a uniform ticket price to both students and non-students.(i) Sum the demand functions of the two groups of moviegoers.(ii) To maximize profit, how many tickets will be sold to students and non-studentsand at what price?(iii) What will be the movie theater’s profit from uniform pricing?(b) The movie theater now charges different prices to students and non-students.(i) What could be a means for the movie theater to separate the two groups ofmoviegoers?(ii) To maximize profit, how many tickets will be sold to students and non-studentsand at what prices?(iii) What will be the movie theater’s profit from group…The following figure shows the demand for monopolists Price 20 10 O Quantity a) 60 b) 59 c) 96 d) 62 Assume that the monopoly has two plants-plant 1 and plant 2. Cost function is given for plant c;(q;)=2+4gifq; > 0 1. i=1,2. c;(q) = 0,otherwise Find the optimal profits. 10 20
- Suppose a monopoly market has a demand function in whichquantity demanded depends not only on market price (P) butalso on the amount of advertising the firm does (A, measuredin dollars). The specific form of this function isQ =(20 - P2) (1 + 0.1A - 0.01A2).The monopolistic firm’s cost function is given byC = 10Q + 15 + A.a. Suppose there is no advertising (A = 0). What outputwill the profit-maximizing firm choose? What market price will this yield? What will be the monopoly’sprofits?b. Now let the firm also choose its optimal level of advertising expenditure. In this situation, what output levelwill be chosen? What price will this yield? What will thelevel of advertising be? What are the firm’s profits in thiscase? Hint: This can be worked out most easily by assuming the monopoly chooses the profit-maximizing pricerather than quantity.The demand function facing the monopolist is given by D(p) 10/p, and the monopolist has positive marginsl cost of c. What is the profit maximising level of outputThe demand function for a monopolist is given by x =100 – 4p, where x is the number of units of product produced and sold and p is the price per unit. Find : (1) total revenue function (ii) average revenue function (ii) marginal revenue func- tion and (iv) price and quantity at which MR = 0. 7. A firm knows that the demand function for one of its products is linear. It also knows that it can sell 1000 units when the price is Rs.4 per unit and it can sell 1500 units when the price is Rs.2 per unit. Determine : (i) the demand function (ii) the total revenue function (iii) the average revenue function (iv) the marginal revenue function. 6.
- A monopolist faces a demand curve Q(p) = 13p-4. The marginal cost (MC) is constant at 4 and there is no fixed cost. What is the monopolist's margin m = p-MC? Р (a) m (b) m || - m = 62 334 4 (d) m = 1/1/5 (e) None of the above.Problem 2Suppose an airline has monopoly over a certain route. The estimated price elasticity of demand for business travelers is EB=-1.9, while the price elasticity of demand for leisure travelers is EV=-2.1. The airline wants to set the prices separately for business and vacation travelers.a) If the marginal cost of transporting each passenger is the same, and the airline is able to separate the two groups perfectly, what is the optimal surcharge (in %) on business travelers? (for example, if leisure travelers pay 100, and business travelers pay 200, then the surcharge is 100%)Answer= b) Suppose that in order to separate business travelers, the airline must offer them slightly better conditions on board (for example, serve them a meal). As a result, the marginal cost of flying a business traveler is 30% higher than for a leisure traveler. What is the optimal surcharge (in %) on business travelers in this case?Answer= c) Now suppose the airline introduces a Basic Economy fare, where…1. A monopolist with cost function c(Q) = faces an inverse demand function given by P(Q) = (a) Find the elasticity of demand with respect to price. (b) Assuming that the monopolist uses MR = MC pricing rule, find his profit maximizing price, p", and output level, q™. (c) Find the marginal cost at q" and calculate the Lerner index. (d) Does the monopolist's market power depend on his cost curve? In particu- lar, does it depend on a? Is your answer surprising?
- There is a monopolist,ConcreteMex,in the concretemarketin Mexico. The demand function is QD= 100–50p. The marginal cost of production isc=0.4. (referencing) Question 1.3 ConcreteMex claimed the high price is due to high transportation costs and persuaded the government to help cut down the costs. As a result, for every unit of concrete sold, the government subsidizes ConcreteMex 0.2dollars. What are the new profit-maximizing price and production levels for ConcreteMex? Under the subsidy policy and the new price in Question 1.3, calculate the consumer surplus, producer surplus, and deadweight loss. You do not need to consider government spending for the deadweight loss.Problem 3 uppose an airline has monopoly over a certain route. The estimated price elasticity of demand for business travelers is E-12, while the price elasticity of demand for leisure travelers is Ey-24. The airline wants to set the prices separately for business and vacation travelers. Economy Firat Class Only i the marginal cost of transporting each passenger is the same, und the airline is able to separate the two groups perfoctly, what is the optimal surcharge (in ) on business travelers? Oor example. fleiture travelers pay 100, and business ravelers pay 200, then the surcharge is 100%) Anvwer b) Suppose that in order to separste business travelen, the airline must offer them slightly better conditions on board (for enample, serve them a meal). As a resul, the marginal cost of flying a basiness traveler is 30% higher than for a leivare traveler. What is the optimal surcharge (in ) on business fravelers in this case? Awwer Now suppose the airline introdaces a Basi Economy fare,…The monopolist faces the demand curve D(p) = 100 – 2p. Its cost function is c(y) = 2y. What is your optimal level of production and prices? Solve mathematically and graph
