1. A Chinese steel producer has identified two markets. The first has a demand of q = 56 - p, the second of q = 24 - p. The cost function is C = 10+q². a) What is the profit maximizing price and output for the monopolist? You can assume that market segmentation is feasible. b)* Suppose now the monopolist's cost increases to C = 10 + 2q². How is your answer in a) affected? Discuss what happened 1. A Chinese steel producer has identified two markets. The first has a demandof q = 56-p, the second of q=24 - p. The cost function is C= 10+q2.a) What is the profit maximizing price and output for the monopolist? Youcan assume that market segmentation is feasible.b)* Suppose now the monopolist's cost increases to C = 10+9². How isyour answer in a) affected? Discuss what happened.

The Monopoly firm produces where MR=MC. The firm follows the price discrimination policy to increase…

A Chinese steel producer has identified two markets. The first has a demand of q = 56 - p, the second of q = 24 - p. The cost function is C = 10+q². a) What is the profit maximizing price and output for the monopolist? You can assume that market segmentation is feasible. b)* Suppose now the monopolist's cost increases to C = 10 + 2q². How is your answer in a) affected? Discuss what happened

A Chinese steel producer has identified two markets. The first has a demand of q = 56 - p, the second of q = 24 - p. The cost function is C = 10+q². a) What is the profit maximizing price and output for the monopolist? You can assume that market segmentation is feasible. b)* Suppose now the monopolist's cost increases to C = 10 + 2q². How is your answer in a) affected? Discuss what happened

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.1P

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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?
Draw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the monopolists profit-maximizing output level. Now, think about a slightly higher level of output (sayQ0+1). According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?
How can a monopolist identify the profit-maximizing level of output if it knows its total revenue and total cost curves?
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?
. Let the demand curve for a monopolist’s product be P = 100 – 2Qd and the marginal cost of production be constant at MC = 10. Suppose that the firm considers moving from a uniform pricing strategy to a two-block tariff where the first block provides 15 units at a price of P1 = $70 and the second block provides an additional 15 units at a price of P2 = $40. How much does the monopolist’s profit rise with this scheme?
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 15
Question 25 The change in total revenue that results from a one-unit increase in quantity sold is marginal revenue. By this definition, the marginal revenue of a monopolist is: O Always equal to price O Above price because the firmi is a price setter O Less than price because to sell more output the firm must reduce the price on all units sold O Less than price because a monopolist is a price taker
If a monopolist with significant barriers to entry is making positive economic profit in the short run, what do we expect to happen as the market transitions to the long run? O The profit will increase since the monopolist has no competition, they can just raise the price to earn higher profits. O It will decrease as positive economic profit signals new firms to enter the market, increasing the market supply, and lowering the prevailing price. O It will increase, in the long run firms will drop out the market increasing the monopolists dominance in the marketplace. O The profit will stay the same, strong barriers to entry prevent new competition.
Give typing answer with explanation and conclusion Suppose that a monopolist whose marginal cost curve is MC(Q)=Q faces the demand curve P=10-2Q. What is monopolist's profit-maximizing quantity, profit-maximizing price, the total surplus (under monopoly profit maximization), also called the "monopoly market surplus," and if the monopolist can perfectly price discriminate, then deadweight loss equals...?
3. A monopolist faces a demand curve given by Q = 70 - P. The monopolist's marginal revenue function is given by MR = 70- 2Q. a. If the monopolist can produce at constant average and marginal costs of AC = MC = 6, what output level will the monopolist choose in order to maximize profits? What is the price at this output level? What are the monopolist's profits? b. Assume instead that the monopolist has a cost structure where total costs are described by TC = 0.25Q2 - 5Q+ 300 and marginal cost is given by MC=0.50-5. With monopolist facing the same market demand and marginal revenue, what price-quantity combination will be chosen now to maximize profits? What will profits be?
I need ans 3 In the next two problems, (1) and (2), consider a monopolist that maximizes profits and charges all consumers the same price. The inverse demand function is P = 100 – Q, where P is the price and Q is output. Calculate the deadweight loss to consumers (if any) and to the monopolist (if any). (1) Marginal cost is always zero. (2) Marginal cost is MC = Q. (3) Assume that every consumer has the inverse demand function P = 10 – Q and that marginal cost is always zero. There are 10 consumers. The monopolist wants to maximize profits by designing a two-part tariff. Calculate the two parts of the tariff, and calculate profits.
A. If the Demand for a monopolist's good shifts out, what happens to the equilibrium price and quantity in this market? How does this compare with the price and quantity in a competitive market when the Demand shifts out? B. What happens to the equilibrium price and quantity for the good sup- plied by a monopoly when the marginal cost of the monopolist shifts uniformly down? How does this compare with what happens under competition when the marginal costs of competitors shift down?