ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- In the following situation, what should the monopolist do to maximize profit? Select the best answer. A monopolist is currently producing a level of output such that marginal revenue is $143 and marginal cost is $109. The monopolist then sets a price based on demand for the current level of output. Answer 2 Points Keyboard Shortcuts The monopolist should decrease output and decrease price. The monopolist should increase output and increase price. The monopolist should incs The monopolist should decrease output and increase price.arrow_forward1arrow_forward2. Given the demand curve of the monopolist Q = 60 - 2P and the cost function of the monopolist TC = 50-4Q+ 0.5 Q^{2}, Then find: A. The inverse demand function, average revenue, the marginal revenue functions, marginal cost function? B. Find the level of output and price that maximizes the monopolist profit? C. The level of profit at equilibrium. D. Show graphically profit maximization level of output?arrow_forward
- Suppose a monopolist faces a market demand that is the first two columns in the table below. Also, in the short run, assume that Total Fixed Cost equals $100 and the monopolist has Total Variable Cost according to the table. Find Total Revenue for each price and quantity combination, and then Marginal Revenue as price falls and quantity increases. Fill in the rest of the costs in the table and find profit at each price and quantity combination as the difference between Total Revenue and Total Cost. If profit is less than zero that indicates a loss. What is the maximum profit you found in this table? At what quantity and price combination is profit maximized for this monopolist? Next, verify this result by using Marginal Analysis to find the profit maximizing price and quantity combination. For each quantity, ask yourself if Marginal Revenue exceeds Marginal Cost. If it does, then profits would be increased by producing that quantity. As you go down the table to higher quantities, stop…arrow_forwardPlease describe each step to solve the problem presented below:arrow_forwardQuestion 2. A monopolist sells the same product at the same price into two different markets. The demand for the product in market #1 is denoted D₁ (p) = 30 - 2p where p is the unit price. The demand for the product in market #2 is given by D₂ (p) = 80 - 3p. (a) If the monopolist sets a price of $20 per unit, what is the total demand? (b) Explain why elasticity of total demand is not defined at a unit price of $15.arrow_forward
- QUESTION 3 A monopolist has a cost function of c(x) = x so that its marginal cost is constant at $1 per unit. It faces the following demand curve: D(p) = {100/p 100/p if p > 20 if p ≤ 20 A. What is the profit-maximizing choice of output/price for the monopolist? Graphically represent the monopoly market. B. If the government sets a price ceiling on the monopolist in order to force it to act as a competitor, what price should the government set? C. What output would the monopolist produce if forced to behave as a competitor? D. Based on the information in parts A - C, find the consumer-, producer-, and social surpluses before and after the government intervention.arrow_forward1. A monopolist's marginal cost function is given by: MC = 4q+ 20 where q is the quantity of good the monopolist produces. Fixed costs are 20, and the demand equation for the good produced is p+4q = 40, where p and q are price and quantity, respectively. - Find expressions for total revenue and for profit, as functions of q. Determine the value of q which maximises the profit. 2. Suppose the numbers x, y and z satisfy the following equations, where a is some number: x+y+z= 5-a 2x+y = 7-a x-y-2z = 0. Use a matrix method to determine the values of x, y and z, in terms of a. For what values of a will x, y and z all be positive? 3. Suppose that a is a positive number and that the function f is given by: f(x, y) = y¹ - 8a²y² +1arrow_forwardSuppose a monopolist's profit-maximizing output is 400 units per week and that the firm sells its output at a price of $40 per unit. The firm has total costs of $8,000 per week. Assume the monopolist is maximizing its profit and earns $20 per unit from the sale of the last unit produced each week. Instructions: Enter your answers as a whole number. a. What are the firm's weekly economic profits? b. What is the firm's marginal cost? c. What is the firm's average total cost? Aarrow_forward
- Use the graph to answer the following 5 questions. A single priced unregulated monopolist faces the demand curve and has the cost curves illustrated in the diagram below. 1. What is the profit Price maximizing quantity of output? 70 a) 25 units. b) 40 units. c) 50 units. d) 60 units. 60 e) 70 units. f) 80 units g) 90 units Marginal Cost 50 2. What price does this monopolist charge? a) $58 b) $20 40 Average Total Cost c) $35 d) $30 e) $45. f) $50 30 g) $40 h) $38 3. What are the total profits? a) $1200 b) $0 c) $1250 d) $200 e) $250. f) $2250. g) $150 h) $1600 20 10 Demand 20 40 60 80 100 120 140 160 Quantityarrow_forwardQuestion 33 Suppose a monopolist faces the demand curve P = 200 – 2Q, has marginal cost curve MC = 2Q, and zero fixed costs. If the monopolist can perfectly price discriminate, which of the following is true? The monopolist sells 33 units at a profit of 3300. The monopolist sells 33 units at a profit of 1650. The monopolist sells 50 units at a profit of 5000. The monopolist sells 50 units at a profit of 2500.arrow_forwardQUESTION 1 A. The total cost function for a monopolist is given by TC = 44,000 + 180Q + 0.03Q² and the demand function is P = 420 – 0.06Q per unit of output. i. What is the profit maximising level of output? ii. Calculate the profit maximizing price. iii. Calculate total profit at the profit maximising level of output.arrow_forward
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