Consider a market with the following kinked inverse demand P=20-3g for q ≤ 3 and P=14-g for q>3. A monopolist in this market has marginal costs of m. Ⓒa. The monopolist will not produce q = 3 for any value of m. Ob. The monopolist will produce q=3 if m= 8. Oc. The monopolist will produce q=3 if 82 m 2 2. Od. The monopolist will produce q=3 if m= 2.
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- 2. A monopolist has two specific demanders with demand equations: qA = 10 – p and qB = 10 – 2p. This monopolist implements an optimal two-part tariff pricing scheme, under which demanders pay a fixed feea for the right to consume the good and a uniform price p for each unit consumed. The monopolist chooses a and p to maximize profits. This monopolist produces at constant average and marginal costs of AC = MC = 2. The monopolist’s profits are __________ and the average price paid by demander B is _________.A monopolist produces both Good A and Good B. There are two types of consumers. Enthusiasts are willing to pay 10 for Good A and 7 for Good B. Marginals are willing to pay 1 for Good A and 6 for Good B. There are 10 of each type of consumer. The monopolist has a choice between bunding the two goods together, or pricing them individually, O a. The Willingness to pay is NOT negatively correlated, and the firm should bundle. O b. The Willingness to pay is negatively correlated, and the firm should price items individually. O c. The Willingness to pay is negatively correlated, and the firm should bundle. Od. The Willingness to pay is NOT negatively correlated, and the firm should price items individually.Consider a monopolist that sells cable subscriptions. When the price is $10 a week, it can sell 175 subscriptions. When the price is $15 a week, it can sell 100 subscriptions. The monopolist has fixed costs of $200. The MC for the provision of the cable is $6 a week. If this monopolist must choose between selling 100 or 175 subscriptions, it will choose to sell units at a price of and earn economic profits equal to 175; $10; $700 100; $15; $700 175; $15; $900 100; $15; $900 none of the above
- 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.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"3. Consider a monopolist who faces the following demand: Demand: P= 100 – 10Q MC= 50+20 a) Find the price quantity combination that maximizes profit for the monopolist. b) Is the firm making positive, negative or zero profits? (100,100) Kareem chooses (60, 105) (500, 400) Saleem chooses Kareem chooses (50,420) 4. Calculate the SPNE/SPNES for the game stated above.
- Consider a monopolist which sells output in two markets, the home market and the foreign market. The menopolist faces a linear demand curve of P - 20 - Qi in the home market and Py - 40- 20, in the foreign market The monopolists total cost is C(q)-1500-q What prices the monopolist charges in the home and the foreign market respectively? O$11, $21 Os12. S16. O $6, S18 O $18, $28. none of the aboveThe customers Jack the Block Monopolist serves are of two types, low- demandcustomers with an inverse demand P 12 - 2Q, and high-demand customers with an inverse demand Ph = 16 - 20h. Thereis one high-demand customer and two low - demand customers. Jack's marginal cost of production is $4 per additional unit. Jack is using a block pricing strategy.Assume that Jack knows which type of customer is which. How much would Jack to sell to low - demand customers, and at what package price? How much would Jack sell to low - demand I = customers and at what package price? Calculate jack's profit and total surplusQuestion 12 Jave Ans Consider a market with the following kinked inverse demand P=20-3g for q3 and P-14-q for q>3. A monopolist in this market has marginal costs of O a. The monopolist will produce q=3 ifm-2 O b. The monopolist will not produce q3 for any value of m. O c. The monopolist will produce q=3 if 8 Od. The monopolist will produce q-3 if 82m2 2 m-
- A monopolist faces inverse market demand of P = 140 – and has Total Cost given by TC(Q) = 2Q? + 10Q + 200. %3D Find this monopolist's profit maximizing output level. Find this monopolist's profit maximizing price. How much profit is this monopolist earning?2. A monopolist sells tours of a stately Montana home to two groups of consumers, Montanans (M) and others (O). The monopolist knows the total demand for group O, which is Qo=100-2P, and the total demand for group M, which is QM =80-2P. The monopolist is able to identify consumers by inspecting their IDs and can thus apply third-degree price discrimination. The monopolist's cost function is C(G) = 4Q + 20. a. What price will the monopolist charge for group O? What price will the monopolist charge for group M? What is the monopolist's total profit? For the next questions assume that it has become illegal to charge different prices and thus the monopolist must charge the same price to everybody. b. Write down equations representing (1) aggregate demand and (2) marginal revenue at all possible prices. Find the profit maximizing price and output. Will both O's and M's purchase tours, or only one or the other? c. Suppose that the monopolist charges $44. What is total consumer surplus at…A monopolist has two types of customers. There are 100 of Type A, who will each pay up to $10 for a single unit of the good, and 50 of Type B, who will each pay up to $8. Neither is willing to purchase additional units at any price. If it must charge a uniform price, find that price. a. Assume that spending $80 on advertising will attract 100 more Type B customers. Should the monopolist advertise? If so, what will happen to price?