Suppose that Comcast has a cable monopoly in Philadelphia. The following table gives Comcast's demand and costs per month for subscriptions to basic cable (for simplicity, we keep the number of subscribers artificially small) Price 68 64 60 56 Quantity 3 52 48 4 5 172 28 204 32 240 36 364 280 40 384 324 44 Suppose the local government imposes a $99 per month tax on cable companies. What will Comcast do? (Assume fixed costs equal $60) 6 Total Revenue. 7 8 204 256 300 336 Marginal Revenue 52 44 36 28 20 OA. Comcast should produce 6 units in the short run and shut OB. Comcast should shut down in the short run and in the long run OC. Comcast should shut down in the short run and produce 6 units in the long run OD. Comcast should produce 6 units in the short run and in the long run OE. None of the above Total Cost 144 down in the long run Marginal Cost Suppose that the flat per-month tax is replaced with a tax on the firm of $16 per cable subscriber (Assume that Comcast will sell only the quantities listed in the table) To maximize profit, Comcast will sell subscriptions (enter a numenc response using an integer) and charge a price of $ for profits of s

Suppose that Comcast has a cable monopoly in Philadelphia. The following table gives Comcast's demand and costs per month for subscriptions to basic cable (for simplicity, we keep the number of subscribers artificially small) Price 68 64 60 56 Quantity 3 52 48 4 5 172 28 204 32 240 36 364 280 40 384 324 44 Suppose the local government imposes a $99 per month tax on cable companies. What will Comcast do? (Assume fixed costs equal $60) 6 Total Revenue. 7 8 204 256 300 336 Marginal Revenue 52 44 36 28 20 OA. Comcast should produce 6 units in the short run and shut OB. Comcast should shut down in the short run and in the long run OC. Comcast should shut down in the short run and produce 6 units in the long run OD. Comcast should produce 6 units in the short run and in the long run OE. None of the above Total Cost 144 down in the long run Marginal Cost Suppose that the flat per-month tax is replaced with a tax on the firm of $16 per cable subscriber (Assume that Comcast will sell only the quantities listed in the table) To maximize profit, Comcast will sell subscriptions (enter a numenc response using an integer) and charge a price of $ for profits of s

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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 Esc 3.50 + PRICE (Dollars per can) 3.00 + 2.50 78°F Sunny 2.00 1.50 1.00 + MC 0.50 + F1 1 F2 Ö- @ ATC F3 0+ # F4 F5 ▬ Monopoly Outcome 0 Profit COL F6 Loss O F7 1 F8 n F9 F10 F11 F12 2 Fn Lock ( 1 6/2 Insert Prt Sc
You have been granted a monopoly in the avocado market. The market demand for avocados is Q = 2000 – 2P. Your cost structure is such that your total costs are TC = 1000+ 400Q. (limit: whatever needed) What is your profit maximizing price and quantity? Explain this in words and show it graphically. What are the profit, producer surplus and consumer surplus? The government is thinking about breaking your monopoly into ten identical firms and giving ownership to 10 random people. Correspondingly, each firm would have a fixed cost of $1000 and a marginal production cost of $400 per unit. In this perfectly competitive environment, what would be the equilibrium price and quantity? Explain this in words and show it graphically. What are the profit per firm, producer surplus and consumer surplus that correspond to your answer to part d)? How much would you be willing to pay to keep the government from taking your monopoly away? Explain.
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A patent gave Sony a legal monopoly to produce a robot dog called Aibo ("eye-BO"). The Chihuahua-size pooch robot can sit, beg, chase balls, dance, and play an electronic tune. When Sony started selling the toy in July 1999, it announced that it would sell 3,000 Aibo robots in Japan for about $2,000 each and a limited litter of 2,000 in the United States for $2,500 each. Suppose that Sony's marginal cost of producing Aibos is $500. Its inverse demand curve is Pj = 3500 - 0.5Qj in Japan and Pa = 4500 - Qa in the United States. Solve for the equilibrium prices and quantities (assuming that U.S. customers cannot buy robots from Japan). The equilibrium quantity in Japan is 3000 and the price, pj, is $ 2000. (round your answers to the nearest integer) The equilibrium quantity in the U.S. is 2000 and the price, pa, is $ 2500. (round your answers to the nearest integer) Show how the profit-maximizing price ratio depends on the elasticities of demand in the two countries. Pj Pa 1+1/a 2,000…
Discuss the basic differences between a competitive and a monopoly market. Which market has higher elastic demand in the long run and why?
1. A manufacturer estimates that D(p)=3000e0.05p units of a particular good will be sold at market price of p cedis per unit. Determine the market price that will result in marginal revenue of zero. 2. A manufacturer estimates that q = 800/30 – p units of a commodity are demanded when cedis per unit are charged. a. Express the price elasticity of demand as function of p . b. Calculate the price elasticity of demand when p=10. Interpret the result. c. Find the price at which the price elasticity of demand is unit-elastic. 3. An auto maker estimates that when q units of its saloon cars are sold in a day, its profit in millions of cedis is modelled as P(q) =100+25In 20 Find the 2 number of cars that should be produced and sold to maximise profit.
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v THE VIRTUAL MONOPOLY OF EPIPENS BY THE APLIA ECONOMICS CONTENT TEAM In 2007, as part of a $6.7 billion deal with Merck & Co., Inc., one of the largest pharmaceutical companies in the world, Mylan N.V., an American generic and specialty pharmaceuticals company, acquired the EpiPen, an epinephrine injection device used to treat the potentially fatal allergic reaction known as anaphylaxis. At the time, EpiPen was not a household brand that everyone knew, but efforts by Mylan's CEO Heather Bresch changed the landscape for this device. According to Jen Wieczner, in an article in Fortune: "She poured marketing resources into the product, and embarked on an awareness and political campaign to get more EpiPens into schools and other public institutions. Today, 47 states have laws about making epinephrine auto-injectors available at school in case of an anaphylaxis incident, largely as a result of Bresch's efforts" (Jen Wieczner, "Mylan CEO Blamed Obama Care for EpiPen Sticker Shock,"…
1. Calculate the profit-maximizing quantity and price for the non-student market. (attached Figure A: Non-Students) 2. Calculate the profit-maximizing quantity and price for the student market. (attached Figure B: Students) 3. Calculate the profit if the firm charges both the non-students and students the same price of $20. (attached Figure A: Non-Students and Figure B: Students) 4. Calculate the profit if the monopoly firm perfectly price discriminates. (attached Figure A: Non-Students and Figure B: Students)
You have been granted a monopoly in the avocado market. The market demand for avocados is Q = 2000 – 2P. Your cost structure is such that your total costs are TC = 1000+ 400Q. (limit: whatever needed) What is your profit maximizing price and quantity? Explain this in words and show it graphically. What are the profit, producer surplus and consumer surplus? The government is thinking about breaking your monopoly into ten identical firms and giving ownership to 10 random people. Correspondingly, each firm would have a fixed cost of $1000 and a marginal production cost of $400 per unit. In this perfectly competitive environment, what would be the equilibrium price and quantity? Explain this in words and show it graphically. What are the profit per firm, producer surplus and consumer surplus that correspond to your answer to part d)? How much would you be willing to pay to keep the government from taking your monopoly away? Explain.
Please no written by hand
To answer this question, you will want to work out the answer using a graph on a piece of scratch paper (not turned in). You are going to compare the outcomes in the case where there is perfect competition to the monopoly case. So, as an intermediate step, you will need to compute the equilibrium outcomes under competition and monopoly. Suppose that you have the following information about the demand for oil. Price ($/barrel) 80 70 60 50 40 30 20 10 Suppose that the marginal cost to produce a barrel of oil is $20. What is the deadweight loss if the oil market is a monopoly? Quantity demanded(# barrels) 5 6 7 8 9 10 11 12