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- As above, the market for eggplants is known to be monopolistic. The demand curve for eggplants is given as P-1,300-40, where P denotes price and Q quantity demanded. The monopolist's cost function is given as C=10,000+1000. Compared to a firm that charged marginal-cost-prices, what is the monopolist's deadweight loss? Please don't enter decimals or commas!Suppose that a monopolistic seller of designer handbags faces the following inverse demand curve: P= 50 – 0.4q. The seller can produce handbags for a constant marginal and average total cost of $10. Calculate the profit-maximizing price for this seller. Now, suppose the government levies a $4 tax per unit on sellers of handbags. Calculate how this tax will affect the price the monopolist charges its customers and who will bear the burden of this tax.Kalamazoo Competition-Free Concrete (KCC) is a local monopolist of ready-mix concrete. Its annual demand function is Q* = 10,000 – 200P, where Pis the price, in dollars, of a cubic yard of concrete and Qis the number of cubic yards sold per year. Suppose that Kalamazoo's marginal cost is $20 per cubic yard and fixed costs are sunk. Instructions: Round your answers to 2 decimal places. a. What is the deadweight loss from monopoly pricing? b. Now suppose that fixed costs are avoidable and large enough such that the monopolist elects not to produce. What is the deadweight loss from the monopoly not producing? %24
- Asked Dec 16, 2019 a monopolist finds the demand curve to be linear. with data points (q,p) on that line of being (100,125) and (20,165). How maqny items can he sell if the price is p=90? What price should she charge to maximize revenue?What is the usual shape of a marginal revenue curve for a monopolist? Why? How can amonopolist identify the profit-maximizing level of output if it knows its total revenue andtotal cost curves?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 (MCMC), marginal revenue (MRMR), average total cost (ATCATC), and demand (DD) 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. (Graph 1) Suppose that BYOB charges $2.00 per can. Your friend Felix says that since BYOB is a monopoly with market power, it should charge a higher price of $2.25 per can because this will increase BYOB's profit.…
- Why does the monopolist always produce only until that level of output where the own-price elasticity of demand is equal to unity ? Elucidate this either graphically or algebraicallySuppose a profit-maximizing monopolist is producing 1100 units of output and is charging a price of $60.00 per unit. If the elasticity of demand for the product is - 3.00, find the marginal cost of the last unit produced. The marginal cost of the last unit produce is $ (Enter your response rounded to two decimal places.) What is the firm's Lerner Index? The firm's Lerner Index is - (Enter your response rounded to two decimal places.) Suppose that the average cost of the last unit produced is $12.00 and the firm's fixed cost is $1000. Find the firm's profit. The firm's profit is $ (Enter your response rounded to two decimal places.)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"
- Suppose a monopoly market has a demand function in whichquantity demanded depends not only on market price (P) butalso on the amount of advertising the firm does (A, measuredin dollars). The specific form of this function isQ =(20 - P2) (1 + 0.1A - 0.01A2).The monopolistic firm’s cost function is given byC = 10Q + 15 + A.a. Suppose there is no advertising (A = 0). What outputwill the profit-maximizing firm choose? What market price will this yield? What will be the monopoly’sprofits?b. Now let the firm also choose its optimal level of advertising expenditure. In this situation, what output levelwill be chosen? What price will this yield? What will thelevel of advertising be? What are the firm’s profits in thiscase? Hint: This can be worked out most easily by assuming the monopoly chooses the profit-maximizing pricerather than quantity.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. 4.00 3.50 Monopoly Outcome 3.00 ATC 2.50 Profit 2.00 Loss 1.50 MC 1.00 0.50 D MR 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 QUANTITY (Thousands of cans of beer) Suppose that BYOB charges $2.75 per can. Your friend Yakov says that since BYOB is a monopoly with market power, it should charge a…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 $2.75 per can. Your friend Charles 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. omplete the following table to determine whether Charles is correct.…