Economics Suppose that a monopolist supplies a product in two distinct markets, LA and NYC. The demand functions for the two markets are PLA = 27 – 3QLA and PNYC = 42 - 6QNYC. The monopolist has a fixed cost of $12 and a constant marginal cost of $5 per unit. a. If segmenting is feasible, what are the profit- maximizing prices, quantities, and maximized profit? b. If segmenting is NOT feasible, what is the profit- maximizing price, quantity, and maximized profit? c. How much is the difference in total consumer surplus in the two cases? Which case makes consumers better off?

Economics Suppose that a monopolist supplies a product in two distinct markets, LA and NYC. The demand functions for the two markets are PLA = 27 – 3QLA and PNYC = 42 - 6QNYC. The monopolist has a fixed cost of $12 and a constant marginal cost of $5 per unit. a. If segmenting is feasible, what are the profit- maximizing prices, quantities, and maximized profit? b. If segmenting is NOT feasible, what is the profit- maximizing price, quantity, and maximized profit? c. How much is the difference in total consumer surplus in the two cases? Which case makes consumers better off?

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter9: Monopoly

Section: Chapter Questions

Problem 7SQP

See similar textbooks

Similar questions

Classify the following as a government-enforced barrier to entry, a banker to entry that is not government-enforced, or a situation that does not involve a barrier to entry. A patented invention A popular but easily copied restaurant recipe An industry where economies of scale are very small compared to the size of demand in the market A well-established reputation for slashing prices in response to new entry A well-respected brand name that has been carefully built up over many years
How can a monopolist identify the profit-maximizing level of output if it knows its total revenue and total cost curves?
Suppose that a monopolist supplies a product in two distinct markets, LA and SF. The demand functions for thetwo markets are PLA = 52 – 4QLA and PSF = 70 – 7QSF. The monopolist has a fixed cost of $20 and a constantmarginal cost of $10 per unit.a. If segmenting is feasible, what are the profit-maximizing prices, quantities, and maximized profit?b. If segmenting is NOT feasible, what is the profit-maximizing price, quantity, and maximized profit?c. How much is the difference in total consumer surplus in the two cases? Which case makes consumers better off?
Consider any market that has a demand curve given by: Qd = 240 - 2P. Where Qd is the total quantity demanded in the market, given in millions of units and P is the market price, calculated in monetary units. Imagine that there are 2 Cournot oligopolists operating in this market with Cmg = CVme = 15 and fixed monthly costs equal to 1,400. About this market, ask yourself: a) What is the profit of each of the oligopolists? b) Imagine that one of the companies managed to implement a process innovation capable of halving its Cmg and CVme, so that they would go from 15 to 7.5. This investment implies an additional monthly expense of $1,800. Discuss the statement: "If this situation occurs, the innovative company will not implement variable cost reduction, as the quantity supplied in the market will increase very little; prices will remain very close to what they are today and its profits will not increase"
A monopolist book publisher with a constant marginal cost of 2 and no fixed costs sells novels in only two countries. Assume the inverse demand curve in country 1 is given by P1=10-2/3Qand the inverse demand curve in country 2 is given byPW=18-QAssuming book shipments across countries are banned so that price discrimination occurs. What is the equilibrium price and quantity of books sold by the monopolist in country 1?Options are: a)p=1, q=16b) p=1 q=12c) p=4, q=8d)p=6, q=6Continuing to assume price discrimination, what is the equilibrium price and quantity of books sold by the monopolist in country 2?a)p= 4,q=14b)p= 6,q=12c)p= 8,q=10d)p= 10,q=8If book imports are permitted in both countries so that price discrimination is impossible, what is the equilibrium price and quantity sold in the two countries combined?a)p=6,q=20b)p=7,q=20c)p=10,q=8d)p=12,q=6
Suppose a monopolist can produce any level of output it wishes at a constant marginal (and average) cost of 5cedis per unit. Assume the monopolistsells its goods in two different markets, separated by some distance. The demand curve in the first market is given by Q1 = 55 − Q1and the demand curve in the second market is given by Q2 = 70 − 2P2. a. If the monopolist decides to charge a single price in the two markets: i. What should this single price be? ii. What will be the total quantity that will be demanded? iii. Find the profit that the monopolist makes by charging a single price.c. Compare the price, quantity, cost, and profit made by the firm under (a), when the firm charges different prices in the two markets and (b) when the firm charges the same price.
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.
Suppose a monopolist faces two groups of consumers. Group 1 has a demand given by P1=50-2Q1 and MR1=50-4Q1. Group 2 has a demand given by P2=40-Q2 and MR2=40-2Q2. The monopolist faces MC=AVC=ATC=$10 regardless of which group he supplies to. We can infer from the demand equations that Group ___ is the inelastic group because the demand is ____ than that of the other group. a. 2; flatter b. 2; steeper c. 1; steeper d. 1; flatter