$30 MC LATC $20 $10 MR Demand 10 20 30 40 Quantity (in Thousands per Month) What is the maximum profit per month that the monopolist will be able to earn according to the graph? zero approximately $20,000 approximately $50,000 approximately $100,000 Price
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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?(c) A discriminating monopolist is faced with the following price elasticities: e1-0.75 and What pricing policy should the monopolist adopt in the two markets? In which market will it be profitable for the monopolist to operate? Assume now that er ez 0.50, will it be advisable for the monopolist to discriminate or operate a single market? run. Briefly explain why the monopolist has no unique supply curve in the short Unlike the competitive firm, the monopoly firm can make supernormal profit in the long run. Explain why. e-1.50 i. ii. iii. iv. V.K The table shows a sample of prices and the quantity sold by a monopolist. What is the price elasticity of demand at a price of $97? A. 1 B. 1.04 OC. 0.89 OD. O Price 100 99 98 97 96 95 94 Quantity 95 96 97 98 99 100 101
- A publisher faces the following demand schedule for the next novel from one of its popular authors:Price Quantity Demanded100 090 100,00080 200,00070 300,00060 400,00050 500,00040 600,000 530 700,00020 800,00010 900,0000 1,000,000The author is paid $2 million to write the book, and the marginal cost of publishing the book is aconstant $30 per book.a. Compute total revenue, total cost, and profit at each quantity. What quantity would a profitmaximizing publisher choose? What price would it charge? b. Compute marginal revenue. (Recall that MR=∆TR/∆Q.) How does marginal revenue compare tothe price? Explain. c. Graph the marginal-revenue, marginal-cost, and demand curves. At what quantity do themarginal-revenue and marginal-cost curves cross? What does this signify? d. In your graph, shade in the deadweight loss. Explain in words what this means. e. If the author was paid $3 million instead of $2 million to write the book, how would this affectthe publisher’s decision regarding the price…As you review the Facebook site, you note that packagingfor your company’s bread uses the words “heart-healthy.”Would you bring this to the attention of the marketing groupresponsible for product packaging? Or would you look fora way to obscure the package design online? Defend youranswer.Graph shows the cost and revenue information for Shitotsu the monopolist. What are the levels of price, output, total (sales) revenue. and total profits if the monopolist were to produce at the positions (a) through (d) indicated in table below? Costs and revenues 30 27 24 21 18 15 9 6 3 0 3 6 9 12 15 Quantity per period 18 21 MR D=AR MC AC
- The graph below shows cost and revenue curves for a monopolistically competitive firm. Price $2.00 $1.75 $1.50 $1.25 $1.00 $0.75 $0.50 $0.25 0 20 40 60 MR Quantity It will charge a price of $ ATC MC D 80 100 120 140 160 This monopolist's profit-maximizing output level is on the x-axis.] units. [Watch for the scale< The accompanying table shows the total daily output for a firm producing specialty cakes and operating with a fixed amount of capital. The cost of labour is $100 per unit per day and the fixed cost of the capital is $2000 per day. Click the icon to view the table. a. Using the information provided, compute all of the short-run costs for this firm and complete the table. Remember to record the marginal costs between the rows indicating total cost. Complete the third, fourth, and fifth columns of the table. Units of Labour Total Output (per day) (per day) 100 20 40 60 80 100 120 140 40 60 300 80 800 1370 1570 1630 1670 300 800 TFC $2000 1370 $ 2000 $ 2000 TVC $2000 Complete the last four columns of the table. Units of Labour (per day) Total Output (per day) 20 100 $ 4000 $ 6000 $ 2000 $ 8000 $2000 $10000 TFC TC $ 4000 $6000 TVC $ 8000 2000 $12000 $14000 $10000 $2000 $14000 $16000 $12000 TC MC MC $10 4 $3.50 $10 4 AFC AFC $20 $2.5 AVC $6.67 $ 13.33 $ 1.46 AVC $20 $7.5 $5.84 ATC ATC $40…ls uccess Tips ■ccess Tips NOUT Actumpto Koup the Highest/3 3. Is monopolistic competition efficient? Suppose that a firm produces baseball bats in a monopolistically competitive market. The following graph shows its demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. PRICE (Dollars par bat) 80 70 60 20 MO о о 10 20 40 ATC 60 QUANTITY (Thousands of bas) Demand Man Camp Outcome Min Unit Cost Because this market is a monopolistically competitive market, you can tell that it is in long-run equilibrium by the fact that optimal quantity. Furthermore, the quantity the firm produces in long-run equilibrium is average total cost. at the the quantity at which…
- The graph below shows the demand and marginal cost curves for the monopolist Mr. Peanut. a. Draw the marginal revenue curve. Plot only the endpoints of the graph below. Costs and revenues 140 120 100 80 60 40 20 0 10 20 30 40 Quantity per period 50 60 D MC Tools marginal revel O MRefer to the graph shown. The equilibrium quantity for the monopolist represented is: MC Price $10 $9 $8 $7 $6 $5 $4 $3 $2 $1 $0 O OO O ATC MR 0 10 20 30 40 50 60 70 80 90 100 Quantity 100 50 30 701 The graph below shows the demand and marginal cost curves for the monopolist Mr. Peanut. a. Draw the marginal revenue curve. Plot only the endpoints of the graph below. Costs and revenues 55 50 45 40 35 30 25 20 15 10 5 0 10 20 30 40 50 60 70 80 90 100110 Quantity per period D MC Tools marginal rever Reset
