Microeconomics (2nd Edition) (Pearson Series in Economics)
2nd Edition
ISBN: 9780134492049
Author: Daron Acemoglu, David Laibson, John List
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Question
Chapter 12, Problem 10P
(a)
To determine
The best single price charged by the monopolist.
(b)
To determine
The price charged by monopolist while engaging in
(c)
To determine
The profit in different price is greater than profit under single price.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
The table shows the demand schedule of a monopolist. Calculate marginal revenue and fill in the revenue column in the table.
Assume that output can only be sold in integer amounts (i.e., 1 unit, 2 units, etc.). Once you have filled in marginal revenue,
identify the quantity produced by the monopolist in this market.
Not all numbers in the answer bank will be used.
Quantity
Price
Marginal cost
Marginal revenue
1
$13
$3
$13
Answer Bank
2
$12
$4
$6
$8
$4
3
$11
$5
$9
$1
$2
$11
$5
4
$10
$6
$9
$7
$3
$10
$0
$12
$7
$8
$8
How many units does the monopolist produce?
units
You are a monopolist with 15 potential buyers for the two video games you sell, VG1 and VG2. You can produce each of these games at constant marginal cost of $1. There are 3 different types of clients: type A (3 of them), type B (5 of them) and type C (7 of them).
Quick Buck and Pushy Sales produce and sell identical products and face zero marginal and average cost. The accompanying graph shows the market demand curve for their product.
Price ($/unit)
1000 2000 3000 4,000
Quantity (units/month)
If Quick Buck and Pushy Sales decide to collude and work together as a monopolist, then together they should produce
Multiple Choice
3,000; $1
4,000; $2
D
2,000; $2
1,000; $3
units per month and charge
per unit.
Chapter 12 Solutions
Microeconomics (2nd Edition) (Pearson Series in Economics)
Knowledge Booster
Similar questions
- A firm facing a downward sloping demand curve is producing a level of output at which price is $16, marginal revenue is $12, and average total cost, which is at its minimum value, is $8. In order to maximize profit, the firm should decrease price. A monopolist is producing a level of output at which price is $138, marginal revenue is $72, average total cost is $72, and marginal cost is $103. In order to maximize profit, the firm should output. A firm with market power is producing a level of output at which price is $19, marginal revenue is $12, average variable cost is $14, and marginal cost is $26. In order to maximize profit, the firm should price.arrow_forwardQ1) Suppose that the inverse demand for a product is represented by the equation P = 50 – Q, where P is the price in Euros and Q is the annual output. Suppose that only one firm produces this product and that the marginal and average cost is €10. Calculate the profit-maximising price for this monopolist. Q2) In autumn, Erling Kagge, who lives alone on an island near the North Pole, puts 50 bags of root vegetables from his harvest into a cave just before a family of polar bears goes in to hibernate. The polar bears do not eat vegetables but would attack Kagge if he approached them. As a result, he is unable to get the vegetables out before the polar bears emerge the following spring. The vegetables spoil at the same rate no matter where he stores them. Which of the following statements best describes this behaviour? A. Kagge’s behaviour is an example of the anchoring effect in action B. Kagge’s behaviour is an example of the framing effect in action C. Kagge’s…arrow_forwardTHREE PART PROBLEM! Answer all parts to solve! What would be the amount earned by a single-price monopolist? If the company is a perfectly price discriminating monopolist, what quantity will it provide and what will be the market’s consumer surplus? A) Q = 500CS = $6,250 B) Q = 360CS = $9,720 C) Q = 480CS = $4,320 D) Q = 360CS = $3,240 E) Q = 500CS = $0 F) Q = 480CS = $0 CS=consumer surplus In 1983, many courts ruled that taxi companies did not have the right to act as monopolies. If all barriers to entry are removed and the market for rides becomes perfectly competitive, what will the long-run price be?arrow_forward
- Sean is a monopolist who operates a business rigging tablets to run twice as fast as the original specifications. If Sean charges $40, he would have 10 customers, but if he lowers the price to $37, he would have 11 customers. What is the marginal revenue of the 11th customer?arrow_forwardReview the graph at right for a nonlinear price discriminating monopolist relying on two prices, $80 and $60. The firm charges a price of $80 for the first 20 units, then a price of $60 for the next 20 units. How much is the total consumer surplus in the market with this form of price discrimination? $(round your answer to the nearest penny) How much is the total producer surplus in the market with this form of price discrimination? $(round your answer to the nearest penny) Price 1 100 90 80 70- 60 50 40 30 20 10- 0 10 20 30 40 50 60 70 80 Quantity MC D 90 100arrow_forwardA firm that sells coffee is a monopolist in a small market. The firm wants to start selling another good, in which it will be a monopolist as well. There are two options: sugar and tea. Both have the same marginal costs. Which of the two should the firm choose to sell along with coffee and why? Would your answer change if the choice was between sugar and shampoo? (Assume that sugar and shampoo have the same marginal cost as well).arrow_forward
- Revenues and costs (dollars) charge the price of. 49. Refer to the graph above. If this monopolist were allowed to choose the profit - maximizing level of output, it would produce _, earn _ in profit/ loss, and create _ in deadweight loss. a) 400 units; $20; $1,200 profit; $2,00 b) 300 units; $30; $3,000profit; $2,000 c) 200 units; $10; $3,000 loss, zero d ) 500 units; $20; $1,000 loss; $3,000 50. Refer to the graph above. If this monopolist were regulated by government and charge the price of agency and forced to set the socially optimal price, it would likely produce. and the market would be units; $10; competitive. d) 400 units; $15; productive. a) 500 units; $20; efficient b) 600 units, $15; inefficient. c) 300 40 30 20 10 $ C C Refer to the graph below: SMC stays for short-run MC. SMC D ATC AVC MR 0 200 400 600 800 1,000arrow_forwardA monopolist is deciding how to allocate output between two geographically separated markets (East Coast and Midwest). Demand and marginal revenue for the two markets are: P1=20−Q1 MR1=20−2Q1 P2=30−2Q2 MR2=30−4Q2 The monopolist's total cost is C=5+5(Q1+Q2). What are price, output, profits, marginal revenues, and deadweight loss if the monopolist can price discriminate? (round all answers to two decimal places) In market 1, the price is $12.50 and the quantity is 7.50 In market 2, the price is $17.50and the quantity is 6.25 The monopolist's profit is $_____.arrow_forwardRefer to the scenario above. The monopolist profit is maximized when the quantity sold is____ packs. How would be the price? a)Q=50, P=2 b)Q=75, P=5 c)Q=100, P=2 d)Q=150, P=5arrow_forward
- Currently, a monopolist’s profit-maximizing output is 400 units per week and it sells its output at a price of $60 per unit. The firm’s total costs are $10,000 per week. The firm is maximizing its profit, and it earns $40 in extra revenue from the sale of the last unit produced each week.What are the firm's weekly economic profits?arrow_forwardIn a monopolistically competitive market, the government applies a specific tax of $1 per unit of output. What happens to the profit of a typical firm in this market? Does the number of firms in the market rise or fall? Assume firms are identical in terms of their cost structure (e.g., their cost curves are the same). If a $1 per unit government tax is introduced, then in the short run firm profits will decrease and in the long run the number of firms will decrease until firms earn zero profitarrow_forwardA firm produces two kinds of products: Word and Excel. Both products are made by a monopolist. Four consumers are considering buying these products. The first consumer's willingness-to-pay (WTP) for Word is 10, and her WTP for Excel is 1. The second consumer's WTP for Word is 8, and her WTP for Excel is 5. The third consumer's WTP for Word is 5, and her WTP for Excel is 8. Lastly, the fourth consumer's WTP for Word is 1, and her WTP for Excel is 10. Assume that marginal costs for both products are zero. (1) price for each product? Also, compute the firm's profit under the optimal a la carte pricing. Suppose that both products need to be sold separately. What should be the optimal Now suppose that bundling is the only option. In other words, the monopolist only (2) sells two products together. What should be the optimal price for the bundle? Also, compute the firm's profit under the optimal bundling. (3) should be the optimal mixed bundling prices? Compute the firm's profit under the…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning