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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.Which of the following statements about a monopoly is true? (a) The monopolist has a flat demand curve because of high barriers to entry.(b) For a monopolistic firm, profit will be maximised where price = marginalrevenue.(c) In the long run, a monopolist can earn only normal profits.(d) Price, in the long run, is not usually equal to the minimum average totalcost.Q.1.19 Which of the following will NOT shift the market supply of labour curve? (a) A change in the wages of the labourers.(b) A change in migration.(c) A change in the size of the population due to a change in birth or deathrates.(d) Trade union action.Babydrink is a monopolist due to its patent in infant formula. The total cost for production in dollars is given by C(q) = 24q² + 600q +9600. The market demand it faces is p = 700 - q. (a) To maximize profit, how much should Babydrink produce? And what is the price it charges? (b) Verify (answer from a) gives and maximum and not minimum?
- Q. Suppose that the demand equation for a monopolist is p = 100 − .01x and the cost function is C(x) = 50x + 10,000.(a) Find the value of x that maximizes the profit.(b) Determine the corresponding price and total profit for this level ofproduction.(c) Find the highest price that can be charged per unit to sell all.(d) The revenue function is R(x) = 100x − 0.01x2, so the marginal revenuefunction is R (x) = 100 − 0.02x. The cost function is C(x) = 50x + 10,000, so the marginal cost function is C (x) = 50. Let us now equate the two marginal functions and solve for x:(e) If the fixed cost is increased from $10,000 to $15,000, the new cost function will be C(x) = 50x + 15,000, but the marginal cost function will still be C (x) = 50. Therefore, the solution will be the same: 2500 units should be produced and sold at $75 per unit. (Increases in fixed costs should not necessarily be passed on to the consumer if the objective is to maximize the profit.)A monopolist faces a demand curve Q(p) c = 1.5 and there is no fixed cost. What is the profit-maximizing quantity? = 18p-2. The marginal cost is constant at (a) The monopolist does not enter the market. (b) The monopolist enters and the quantity is q = 2. (c) The monopolist enters and the quantity is q = 3. (d) The monopolist enters and the quantity is q (e) The monopolist enters, but chooses a quantity not listed above. = 10.A firm typically achieves its position as a monopolist as a result of _. (a) the absence of long-run profits in an industry (b) a small market and a constant average cost (c) barriers to entry (d) a downward sloping demand for the product. Provide reasons for incorrect as well.
- (2) function p = A monopolist (public utility company) serves a market with inverse demand 20 – q. The monopolist's long-run cost function is C(q) = 10 + 2q if q > 0 and C(0) = 0. %3| (a) If the monopolist is not regulated, what price does it charge and how much output does produce? (b) The government wants to regulate the monopolist to maximize social surplus. Describe an optimal regulation policy that ensures the monopolist does not exit the market. How much does social surplus increase with this policy?Suppose the market in the previous question was monopolized. That is, now there is just one firm that is serving the entire market. The market demand is given by QD 125-P. The monopolist's total cost function is given by TC(q) 4q2+125. (a) What is the monopolist's marginal revenue curve? (b) What is the monopolist's profit maximizing quantity? ( c) What is the profit earned by the monopolist? (d) Calculate the consumer surplus in this market, 1 (e ) Is the monopolist operating on the elastic portion of the demand curve or the inelastic portion? Why is the monopolist doing so?Please refer to th graph attached. The graph shows the Demand, Marginal Revenue, Average Total Cost, Average variable Costs and Marginal Cost curves for a monopolist. (a) What is the profit maximizing/ loss minimizing quantity of output and what is the maximum price the monopolist can charge? (b) Is this monopolist making economic profit or economic loss? How do you know? Explain please. (c) Calculate the firms profit or loss and show the economic profit/loss on the graph.
- A monopolist produces a product with price, quantity sold and marginal cost as shown in the table below. The fixed cost is $50. Price ($) Quantity Sold Marginal Cost ($) 100 1 20 90 2 30 80 3 40 70 4 50 60 5 60 (a) If the monopolist need to sell at a standard price, determine the optimal quantity, the price, and the profit of the monopolist. (b) If the monopolist can practice perfect price discrimination, determine the optimal quantity, the price and the profit of the monopolist.Exercise A.6 A monopolist facing the demand curve Q = 42 – 0.6P operates with constant average and marginal costs equal to 20. a) Calculate the quantity, price and profit obtained by the monopolist. Represent graphically. (b) What quantity, what price and what benefit will you get if you can apply first-degree price discrimination? Calculate the consumer surplus and represent graphically. c) The monopolist warns that he can separate consumers into two distinct groups with demands Q1 = 12 - 0.1P1 and Q2 = 30 - 0.5P2. Calculate the quantities, the prices you will set in each market, and the profit you will make. Represent graphically.P₂ P₁ Ps Q₁ Q₂ Marginal revenue Q3 Q4 Marginal cost Average cost D The monopolist maximizes its profit by charging a price equal to: A) P4. B) P3. C) P₁. D) P₂.