When a perfectly competitive industry is taken over by a monopoly, some consumer surplus is transferred to the monopolist in the form of economic profit marginal cost deadweight loss
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- Ajax Cleaning Products is a medium-sized firm operating in an industry dominated by one large firm—Tile King. Ajax produces a multiheaded tunnel wall scrubber that is similar to a model produced by Tile King. Ajax decides to charge the same price as Tile King to avoid the possibility of a price war. The pnce charged by Tile King is $20,000. Ajax has the following short-run cost curve: TC=800,0005,000Q+100Q2 Compute the marginal cost curve for Ajax. Given Ajaxs pricing strategy, what is the marginal venue function for Ajax? Compute the profit-maximizing level of output for Ajax. Compute Ajaxs total dollar profits.How does a monopolist decide its production amount and pricing strategy? Explain. Use of appropriate graphs is highly recommendedThe demand curve faced by monopolist and his total cost functions are given below;Demand function; Q = 3000 – 60PTotal Cost function; TC = 100 +5Q+1/480Q2 “Compare to perfect competitive producer, the monopolist is misused scare resources” Explain using suitable grapes
- The demand schedule of Karachi electric (KE) (known as monopolist) is given as below. You needto find the missing values using TR-TC & MR-MC approaches to analyze its cost of productionand profit maximizing point.Output Price Total Cost Total Revenue MC MR0 Rs.24 Rs.101 21 142 18 203 15 284 12 385 9 50a. Find the missing values of Total Revenue columnb. Find the output level that maximizes the firm's profit, using TR-TC approachc. What price should the firm set to achieve maximum profit?d. Complete the final two columns to verify that the same conclusions are reached using theMR = MC rule.e. Compare both the results and comment on the business and its positionBeing the only firm in the industry could monopolist determine both its price and output at the same time? Expalin using illustartionsSuppose a pure monopolist faces the following cost data, as shown by the table on the left, and the demand schedule, as shown on the right. a. Calculate the missing TR and MR amounts. Instructions: Enter your answers rounded to two decimal places. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Answer is complete and correct. Production and Costs Demand Average Fixed Cost Average Variable |Average Total Total Marginal Quantity Demanded Total Marginal Revenue Price Product Cost Revenue Cost Cost $115 2$ 0.00 1 $60.00 $45.00 $105.00 $45 100 1 $ 100.00 2$ 100.00 2 30.00 42.50 72.50 40 83 2 $ 166.00 2$ 66.00 3 20.00 40.00 60.00 35 71 3 $ 213.00 $ 47.00 4 15.00 37.50 52.50 30 63 4 252.00 2$ 39.00 12.00 37.00 49.00 35 55 24 275.00 $ 23.00 6. 10.00 37.50 47.50 40 48 6. 2$ 288.00 $ 13.00 7 8.57 38.57 47.14 45 42 7 24 294.00 2$ 6.00 8. 7.50 40.63 48.13 55 37 8. 2$ 296.00 $ 2.00 9. 6.67 43.33 50.00 65 33 24 297.00 2$ 1.00 10 6.00 46.50…
- Perfectly competitive firms and monopolists both have positive economic profits in the long run view the demand curve as horizontal choose the output level where marginal revenue equals marginal costIn the diagram below, when the competitive market is taken over by the monopolist, the monopolist is able to enjoy producer surplus in terms of the area(s)_ Dalam rajah di bawah, apabila pasaran kompetitif diambil alih oleh monopoli, monopoli dapat menikmati lebihan pengeluar sebanyak kawasan Price / Harga (P) D C B A C. E BCEH F d. BCEF Lin G QM H Qc SS = MC* MRM a. BCEH minus GFH / BCEH tolak GFH DD = P b. BCEF minus GFH / BCEF tolak GFH Output (Q)How is the demand curve perceived by a perfectly competitive firm different from the demand curve perceived by a monopolist?
- Draw a perfect competition (PC) two-diagram model showing the long-run equilibrium outcome. Now imagine that a monopolist buys up all of the PC firms and runs all of the production facilities it has purchased as one company. Relabel the "PC Market" diagram as "Monopoly Market" and the "Representative PC Firm" diagram as "Representative Monopoly Plant". a) In your plant diagram, illustrate the changes in Q*, Pe, ATCE, and total profits or losses that will happen when the monopoly buys up the representative PC firm. Explain in detail all the changes you've made to the diagram. b) Illustrate the monopoly market outcomes in your market diagram. Explain how these outcomes differ from the outcomes when this was a PC market, and why they differ.Figure: Monopoly Model Price, marginal revenue, marginal cost, average total cost MC O OPDJ. O OIHJ. O IPDH. O OSBJ. J KL N ATC MR Demand Quantity (per period When the firm is in equilibrium, its total cost is the area of rectangle: Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.How does a monopolist decide its production amount and pricingstrategy? Explain.
