Question No. 18 Refer to the Figure below. What price will the monopolist charge in order to maximize profit?10MCATC6.- AVC3.MR0 1 2 3 4 5 6 7 8 9 10 Quantity(units per day)Question No. 19 Refer to the above Figure in question 18. At the profit-maximizing what is price, output, andtotal revenue is?Question No. 20 Explain why only normal profit may be earned in the long run in perfect competition?Price(£ per unit)

A monopoly is a market structure where a single entity has significant control over the supply of a…

Question No. 18 Refer to the Figure below. What price will the monopolist charge in order to maximize profit? 10 MC 9 ATC AVC 4 MR 0 1 2 3 4 56 78 9 10 Quantity (units per day) Ouestion No. 19 Refer to the above Figure in qestion 18 At the profit-maximizing what is price outnut and Price(f per unit)

Question No. 18 Refer to the Figure below. What price will the monopolist charge in order to maximize profit? 10 MC 9 ATC AVC 4 MR 0 1 2 3 4 56 78 9 10 Quantity (units per day) Ouestion No. 19 Refer to the above Figure in qestion 18 At the profit-maximizing what is price outnut and Price(f per unit)

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter25: Monopoly

Section: Chapter Questions

Problem 14E

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Suppose the market for Hula Hoops is monopolized by a single firm. a. Draw the initial equilibrium for such a market. b. Now suppose the demand for Hula Hoops shifts outward slightly. Show that, in general (contrary to the competitive case), it will not be possible to predict the effect of this shift in demand on the market price of Hula Hoops. c. Consider three possible ways in which the price elasticity of demand might change as the demand curve shifts: It might increase, it might decrease, or it might stay the same. Consider also that marginal costs for the monopolist might be increasing, decreasing, or constant in the range where MR=MC Consequently, there are nine different combinations of types of demand shifts and marginal cost slope configurations. Analyze each of these to determine for which it is possible to make a definite prediction about the effect of the shift in demand on the price of Hula Hoops.
What is the usual shape of a total revenue curve for a monopolist? Why?
Question 4 Think a price making firm (monopolist) with a downward-sloping demand curve is one with a price elasticity of demand equal to-1. This is illustrated in the following diagram. P=AR 20 Expenditure stays the same as price changes TR AR = = Q d (TR) dQ Slope = b/Q 40 100 Diagram 5 Unit elastic demand (Pe=-1) MR = As price and quantity change by the same proportion, total revenue is the same at each price (the TR curve is horizontal). This gives the following TR, AR and MR equations: TR=b b -D (AR) Q = 0 Q As TR is constant at all outputs, so MR must equal zero. In diagram 5, what is the value of b in equation TR=b?
3. The figure presents the demand curve, marginal revenue, and marginal costs facing a monopolist producer. What is the profit-maximizing level of output? What price will the monopolist charge for the quantity in part a? Plot the profit-maximizing price and quantity from parts a and b on the graph. What are the efficiency costs (deadweight loss) of monopoly output/pricing? Provide a numerical answer and illustrate this area on the graph. What is consumer surplus under monopoly output/pricing? Illustrate this area on the graph.
Q14 Monopolists, like firms in other market structure, strive to maximize profit. Microsoft when it first came out with its Windows operating system was thought to be a monopolist. Assume that Microsoft is a monopolist and calculates that at its present output level, marginal cost is $5.50 and marginal revenue is $4.50. Microsoft could increase profits by Multiple Choice decreasing output and leaving price unchanged. increasing price and decreasing output. decreasing price and increasing output. leaving both quatity and price unchanged. decreasing price and leaving output unchanged.
2. Consider the diagram below: price/cost 260 taka 220 taka 175 taka MC=ATC 55 110 MR a) If a firm is single -price monopolist, what price firm will charge and what is the profit maximizing output? Calculate the area of monopolist's profit (in tk), consumer surplus (in tk) and deadweight loss (in tk) from the information of the diagram. b) If the firm would work as a perfectly price discriminating monopolist, what amount of output firm would have produced? How firm would have charged price? Calculate the area of consumer surplus (in tk), profit(in tk) and deadweight loss (in tk) from the information of the diagram c) From your calculations in a) and b) which market structure has the highest welfare cost for a firm? Give adequate reason from your calculation. d) From your calculations in a) and b), which market structure has the highest profit and the lowest consumer surplus at the same time? Why it happens? [Show the breakdown of your calculations for a) and b)]
3. A monopolist movie streaming service has two kinds of movies in its library - Action (A) and Romantic Comedies (R). Demand: There are two groups of consumers (Group X and Group Y) for the streaming service with the following value for each movie genre: Genre A Value Group X $100 Group Y $80 Value Group X $50 Group Y $70 Cost: The cost of streaming each type of content is MCA = $0, MCR = $60. Efficient Outcome a) Describe the efficient outcome by filling the table below Should X consume? (Y/N) Should Y consume? (Y/N) Consumption of A Consumption of R Total Efficient Surplus Genre R Surplus from efficient consumption (Value - Cost)
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
Problem 3 Suppose that a monopolistic seller of flux capacitors faces the inverse demand curve P = 40 - and that the monopolist can produce flux capacitors at a constant marginal and average total cost of $5. (a) How many units will an unregulated monopolist sell? 1 (b) Suppose that the government imposes a price ceiling of $6. Find the firm's marginal revenue of the 10th, the 68th, and the 69th unit. (c) How many units will a profit-maximizing monopolist sell when the price ceiling is in place? At what price? (d) Show in a graph the deadweight loss of unregulated monopoly and the deadweight losses with the price ceiling. Does the price ceiling improve social welfare?