4. If a monopolist could perfectly price-discriminate (L04, LO5) a. the marginal revenue curve and the demand curve would coincide. b. the marginal revenue curve and the marginal cost curve would coincide. c. every consumer would pay a different price. d. marginal revenue would become negative at some output level. e. the resulting pattern of exchange would still be

4. If a monopolist could perfectly price-discriminate (L04, LO5) a. the marginal revenue curve and the demand curve would coincide. b. the marginal revenue curve and the marginal cost curve would coincide. c. every consumer would pay a different price. d. marginal revenue would become negative at some output level. e. the resulting pattern of exchange would still be

Micro Economics For Today

10th Edition

ISBN:9781337613064

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter9: Monopoly

Section: Chapter Questions

Problem 9SQ

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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.
6a. Consider the monopolist that faces the following market demand and total cost functions: P Q = 30 – 3 TC= 100-5Q+Q? i. Find the profit-maximizing price (Pm) and output (Qm) for this firm. At this price-quantity combination, how much is consumer surplus? How much economic profit is this monopoly earning?
Consider a market with a monopoly firm. Sales revenue of this firm is $10,340,000$⁢10,340,000, total cost is $4,400,000$⁢4,400,000, and average cost is $2.00$⁢2.00. Another firm wants to enter the market and provide the same product at a lower price. To intimidate the potential competitor, the monopoly firm intends to use predatory pricing.By how much can this firm reduce the price of its product without losses? Enter your answer in the box below and round to two decimal places if necessary.
Bonus: A monopolist sells output at zero cost to two types of consumers, H and L, whoseinverse demand curves are given by Ph=45-5q and pl=30-5q. Derive and discuss the optimalsecond-degree price discriminating equilibrium. And calculate the consumer surplus for high demanded package only! Note that the monopolist cannot identify individual types, but he knows that there are two types exist.
. Profit maximization and loss minimization BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Suppose that BYOB cannot price discriminate; that is, it sells its beer at the same price per can to all customers. The following graph shows the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) for beer in this market. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for BYOB. If BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if BYOB is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. Suppose that BYOB charges $2.50 per can. Your friend Clancy says that since BYOB is a monopoly with market power, it should charge a higher price of $3.00 per can because this will increase BYOB’s profit. Complete the…
2. A monopolist has two specific demanders with demand equations: qA = 10 – p and qB = 10 – 2p. This monopolist implements an optimal two-part tariff pricing scheme, under which demanders pay a fixed feea for the right to consume the good and a uniform price p for each unit consumed. The monopolist chooses a and p to maximize profits. This monopolist produces at constant average and marginal costs of AC = MC = 2. The monopolist’s profits are __________ and the average price paid by demander B is _________.
Consider a monopolist which sells output in two markets, the home market and the foreign market. The menopolist faces a linear demand curve of P - 20 - Qi in the home market and Py - 40- 20, in the foreign market The monopolists total cost is C(q)-1500-q What prices the monopolist charges in the home and the foreign market respectively? O$11, $21 Os12. S16. O $6, S18 O $18, $28. none of the above
Figure #2: MC 7 AC D MR Quantity (Q) 100 125 150 175 200 In Figure#2, the profit-maximizing condition of a monopolist is to produce following units of output and to charge the following price respectively: 58660S43 21 Price
: Suppose you are a monopolist and you have two customers, A and B. Each will buy either zero or one unit of the good you produce. A is willing to pay up to $35 for your product: B is willing to pay up to $10. You produce this good at a constant average and marginal cost of $8. If you could practice third-degree price discrimination, you will eam a profit of $
9. Suppose that the downstream market for widgets is characterized by the inverse demand curve P = 100 - Q. Widget retailer is controlled by the monopolist WR Inc., which obtains its widgets from the monopoly wholesaler WW Inc. at a wholesale price of ww per widget, WW inc. obtains the widgets in turn from the monopoly manufacturer WM ltd. at a manufacturing price of wm per widget. WM Inc. incurs marginal costs of $10 per unit in making widgets. WW and WR each incur marginal costs of $5 in addition to the prices that they have to pay for widgets. What is the equilibrium widget price to consumers, P, the equilibrium wholesale price ww and the equilibrium manufacturing price wm? What is the profit earned by each firm at these prices? Show that vertical integration by any two of these firms increases profit and benefits consumers. Show that integration of all three firms is even more beneficial.
Q62 Assume that Mattel is a monopolist that sells 8 units of a toy per day at a unit price of $16. If it lowers the price to $15, its total revenue increases by $37. This implies that its sales quantity increases by Multiple Choice 1 unit per day. 12 units per day. 2 units per day. 3 units per day. 4 units per day.
6. Consider a monopolist facing a linear inverse demand curve p(q) = a bg, where q denotes units of output and b > O represents the slope of the inverse demand curve. This rm faces cost function C (q) = F + cg, where F denotes its xed costs (can contain sunk costs), c represents the monopolist s (constant) marginal cost of production and assume a >с 0. a. Find the monopolist's profit maximizing output and label it Verify if it is positive. b. What is the market price pm and the profit level Tm? Is the profit level always positive? If not what is the condition for the profit level to be positive? Explain c. Find the absolute value of the price elasticity of demand Is the elasticity greater than one? Find the markup on price or Lerner index, defined as p(q)-C'(q) evaluated at qm as defined in the textbook. L (q) p(q) at gm. What happens with L when n increases? Is it true that "A proft maximizing monopolist decreases its markup as demand becomes more price elastic. Explain. d. Find the…