Consider a monopolist with a marginal cost equal to $5 selling to two market segments with inverse demands given by pH = 20 - qH and pL = 15-qL. There are no fixed costs. Calculate the amount of profit the monopolist could
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- 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?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.You are the manager of a monopoly. Your analysics department estimates that a typical consumer's inverse demand function for your firm's product is P= 300 -200 and your cost function is qa= 600 a Determine the optimal two-part pricing strategy. Perunit fee S Fixed fee $ b. How much additional profit do you earn using a two-part pricing strategy compered with cherging this consumer a per-unit price?
- The quantity sold by a monopolist using first degree price discrimination is higher than the quantity sold by a monopolist who cannot price discriminate. O True O False$30 MC ATC $20 $10 MR Demand 10 20 30 40 Quantity (in Thousands per Month) What is the maximum profit per month that the monopolist will be able to earn according to the graph? zero approximately $20,000 approximately $50,000 Oapproximately $100,000 PriceBonus: A monopolist sells output at zero cost to two types of consumers, H and L, whoseinverse demand curves are given by Ph=45-5q and pl=30-5q. Derive and discuss the optimalsecond-degree price discriminating equilibrium. And calculate the consumer surplus for high demanded package only! Note that the monopolist cannot identify individual types, but he knows that there are two types exist.
- Consider a monopolist who charges a single price to all of its customers. If this monopolist starts price discriminating, its output will and its profit will Orise; fall O fall; fall Ofall; rise Orise; riseWhat 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?if a natural monopolist practices perfect price disrimination, how does it affect the profit-maximizing level of output, consumer surplus, producer surplus, total surplus, and deadweight loss? explain with a diagram.
- The demand function for a monopolist is given by x =100 – 4p, where x is the number of units of product produced and sold and p is the price per unit. Find : (1) total revenue function (ii) average revenue function (ii) marginal revenue func- tion and (iv) price and quantity at which MR = 0. 7. A firm knows that the demand function for one of its products is linear. It also knows that it can sell 1000 units when the price is Rs.4 per unit and it can sell 1500 units when the price is Rs.2 per unit. Determine : (i) the demand function (ii) the total revenue function (iii) the average revenue function (iv) the marginal revenue function. 6.A monopolist serves a market with five potential buyers, each of whom would buy at most one piece of the monopolist's good. Anna would be willing to pay up to £80 for it, Bob up to £90, Chloe up to £100, Dave up to £110 and Elizabeth up to £120. The monopolist's variable cost function is given in below table. Quantity Variable Costs 1 3. 4. 40 90 150 220 300 Price Marg. Revenue a) Indicate in the table which price the monopolist would want to charge for each given quantity. b) Find the marginal revenue for each quantity. c) Find the monopolist's profit maximising price under the assumption that he wants to produce anything at all. d) How large can the monopolist's fixed costs be such that he still wants to start producing at 1. D Focus 9°C Sun