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A
If a competitive industry, serving the same market as the monopolist, has a marginal cost of MC(Q) = Q, then
a. average cost pricing generates maximum welfare
b. antitrust action against the monopolist would generate the same welfare as maximum price setting at marginal cost for the existing monopoly
c. antitrust action against the monopolist would generate less welfare than maximum price setting at marginal cost for the existing monopoly
d. antitrust action against the monopolist would generate more welfare than maximum price setting at marginal cost for the existing monopoly
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- A market with a monopoly producer has inverse demand P = 120 - 20 (which gives marginal revenue MR = 120 - 40). The monopolist has marginal costs are MC(Q) = 40 and no fixed costs. a) What is the monopolist's producer surplus when it charges the profit maximizing uniform price. b) What is the deadweight loss due to monopoly in this market? ) What would the monopolist's producer surplus be if it could engage in first degree price discrimination (ie. If t knew all consumers' exact willingness to pay for the good).Natural Monopoly A monopolist faces the following market demand function: D(P) = 120 – P and has total costs equal to TC(Q) = 900 + 20Q. Solve for the monopolist's price, output, profit and for the consumer surplus and the dead weight loss in the following 3 cases: 1. (a) The monopolist is free to set its profit maximizing price. (b) The price is regulated and equal to the marginal cost. (c) The price is regulated and equal to the average cost. You will find that there are two such prices. Choose the one with the highest production level.A monopolist has a cost function of c(y)=yso that its marginal costs are constant at $1 per unit. it faces the following demand curve: 0 if p> 20 or 100/y if p is less than or equal to 20 find (1) What is the profit-maximizing choice of output? (2) If the government could set a price ceiling on this monopolist in order to force it to act as a competitor, what price should the government set? 3) What output would the monopolist produce if he is forced to behave as a competitor?
- Q,)Assume a monopoly market characterized by the following: P = 10 – 1.5Q (demand curve) MC = 2 + Q (marginal cost curve) Find the monopolist’s equilibrium price and quantity consistent with profit maximization= 240 + 0.5Q², and face 4. A monopolist has the cost function TC(Q) market demand P = 45 – Q. (a) Find the monopoly equilibrium price and output. Find the monopolist's profit.A monopoly firm faces an inverse demand function like p=100-Q. The firm's cost curve is C(Q)=50+5Q. a) What is the profit-maximizing solution? Calculate the optimal price and quantity. b) Intuitively explain how your answer changes if C(Q)=100+5Q? c) Graphically show or explain why after an increase in the demand curve, a monopoly's price may stay constant, but its output may increase. d) Imagine subsidy is granted to each firm operating in the monopolistic competitive market which leads to decrease in their FC of production. What is the effect of this government policy in the prices and the number of firms in the market? Why? Explain. %23 A BI - T: F4 F10 Scrll Lock F5 F6 F7 F8 F9 Num Lock PrtSc SysRq Insert De 7 7 8 8 9 9 R Y U 4 O P 6. F G H J K 1 L Er 3 C V B N M ? Page Up + II
- A monopolist can produce at a constant marginal cost of $5 and a fixed cost of $55. It faces a market demand curve given by Q = 24- P/4. Demand: Q = 24 - P/4 Inverse Demand: P = 96-4Q Total Revenue (TR) = 96Q-4Q^2 Marginal Revenue (MR) = 96 - 8Q Marginal Cost (MC) = 5 Profit maximizing quantity of monopolist= 11.375 Profit maximizing price of monopolist= $50.5 Profit of monopolist= $ 517.5625 Suppose a competitive firm has the same constant marginal cost of £5. Find the profit maximising output for this firm. What is the price that the competitive firm must charge? The government decides to impose a new policy on this monopolist. In particular, the government wants to introduce price regulation such that the regulated price will consequently make this monopolist earns zero profit only. What is the regulated price that this monopolist should charge? How many quantities of output are produced with this new regulated price?Suppose a monopolist has the following cost function C(Q) = 40Q (with marginal cost MC = 40). Suppose it faces market demand of P = 100 - Q.< (a) Sketch market demand, marginal revenues, and marginal costs. Be neat.< (b) What is the monopolist's optimal level of output, price, and profits? Show your work.< (c) What is the deadweight loss (DWL) associated with the monopoly output? Show your work and explain why the DWL arises.< (d) (Cournot Competition) Now suppose we added a second firm that has identical costs to the monopolist. Show that the resulting Cournot Equilibrium has each firm producing output of 60 units. That is, show that, if the other firm sells 60 units, then the best a firm can do is also sell 60 units. (e) What are total profits under Cournot Competition compared to the Monopoly case? Why do they differ? (f) What happens to the deadweight loss under Cournot Competition relative to the Monopoly case? Explain why this happens.<A monopolist faces two markets (think of it as a domestic market and a foreign market). The demand functions of the two markets are respectively: Q 1 =100 - P 1 ; Q 2 =180 - P 2 The cost function of the monopoly firm is: TC = 40Q. Q1: If this firm charges a uniform price, what price should maximize its profit? What is the total profit? Q2: If this firm charges a Third Degree Price Discrimination, what is the equilibrium price for each market in order to maximize profits? And what is the profit of each market and the total profit?
- A single price monopolist has a cost function of c(Q) = Q. It faces the following demand curve: D(p) = 0, if p > 20 and D(p) = 100/p, if p ≤ 20. What is the profit-maximizing choice of output? If the government could set a price ceiling on this monopolist in order to force it to act as a competitor, what price should they set?Consider a monopoly with the following marginal cost and demand curves: MC=2Q+200,p=2,600−2Qa. What is the marginal revenue curve, MR(Q), the monopolist faces? Why is this different from the horizontal marginal revenue curve faced by a competitive firm? b. What is the monopolist’s profit-maximizing quantity, Qm and the associated price pmc. What is the monopolist’s markup (also known as Lerner Index)? How can it be expressed in terms of the price elasticity of demand?If a firm successfully engages in product innovation, resulting in monopoly power for the new good/service, which of the following is generally true? The innovating firm will not be able to earn any producer surplus from the production and sale of the new product/service. The new market will generate surplus for the innovating firm, but an inefficiently high level of the good will be produced and consumed. The new market will generate surplus for the innovating firm, but an inefficiently low level of the good will be produced and consumed. None of these is generally true.
