Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Chapter 9, Problem 15SQ
To determine
The price of the monopolist.
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A perfectly competitive firm is expected to make a $0 economic profit in the long-run. What type(s) of profit would you expect a
monopolist to earn in the long-run? Why the difference?
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QUESTION 1
A. The total cost function for a monopolist is given by TC = 44,000 + 180Q + 0.03Q² and the demand
function is P = 420 – 0.06Q per unit of output.
i.
What is the profit maximising level of output?
ii.
Calculate the profit maximizing price.
iii.
Calculate total profit at the profit maximising level of output.
Draw the cost curves for a typical firm. Explain how a competitive firm chooses the level of output that maximizes profit. At that level of output, show on your graph the firm’s total revenue and total cost.
Draw the demand curve, marginal revenue curve, average total cost curve, and marginal-cost curve for a monopolist. Show the profit-maximizing level of output, the profit-maximizing price, and the amount of profit.
Why the demand curve for a firm operating in monopolistic competition is more elastic compared to the firm operating as a monopoly. kindly solve all the parts.
Chapter 9 Solutions
Micro Economics For Today
Ch. 9.1 - Prob. 1GECh. 9.1 - Prob. 2GECh. 9.2 - Prob. 1YTECh. 9.4 - Prob. 1YTECh. 9 - Prob. 1SQPCh. 9 - Prob. 2SQPCh. 9 - Prob. 3SQPCh. 9 - Prob. 4SQPCh. 9 - Prob. 5SQPCh. 9 - Prob. 6SQP
Ch. 9 - Prob. 7SQPCh. 9 - Prob. 8SQPCh. 9 - Prob. 9SQPCh. 9 - Prob. 10SQPCh. 9 - Prob. 11SQPCh. 9 - Prob. 12SQPCh. 9 - Prob. 13SQPCh. 9 - Prob. 1SQCh. 9 - Prob. 2SQCh. 9 - Prob. 3SQCh. 9 - Prob. 4SQCh. 9 - Prob. 5SQCh. 9 - Prob. 6SQCh. 9 - Prob. 7SQCh. 9 - Prob. 8SQCh. 9 - Prob. 9SQCh. 9 - Prob. 10SQCh. 9 - Prob. 11SQCh. 9 - Prob. 12SQCh. 9 - Prob. 13SQCh. 9 - Prob. 14SQCh. 9 - Prob. 15SQCh. 9 - Prob. 16SQCh. 9 - Prob. 17SQCh. 9 - Prob. 18SQCh. 9 - Prob. 19SQCh. 9 - Prob. 20SQ
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- Draw the cost curves for a typical firm. Explain how a competitive firm chooses the level of output that maximizes profit. At that level of output, show on your graph the firm’s total revenue and total cost. Draw the demand curve, marginal revenue curve, average total cost curve, and marginal-cost curve for a monopolist. Show the profit-maximizing level of output, the profit-maximizing price, and the amount of profit. Why the demand curve for a firm operating in monopolistic competition is more elastic compared to the firm operating as a monopolyarrow_forwardSuppose a monopolist’s profit-maximizing output is 200 units per week and that the firm sells its output at a price of $60 per unit. The firm has total costs of $9,000 per week. Assume the monopolist is maximizing its profit and earns $30 per unit from the sale of the last unit produced each week. a. What are the firm's weekly economic profits? $ b. What is the firm's marginal cost? $ c. What is the firm's average total cost?arrow_forwarda. Draw the cost curves for a typical firm. Explain how a competitive firm chooses the level of output that maximizes profit. At that level of output, show on your graph the firm’s total revenue and total cost. b. Draw the demand curve, marginal revenue curve, average total cost curve, and marginal-cost curve for a monopolist. Show the profit-maximizing level of output, the profit-maximizing price, and the amount of profit. c. Why the demand curve for a firm operating in monopolistic competition is more elastic compared to the firm operating as a monopoly. Kindly answer all the sub parts.arrow_forward
- I will rate and like, thank you! Easy economics question. Create graph that includes: Demand curve, marginal cost, and marginal revenue. Identify the profit-maximizing quantity and price for this monopolist. To do this you will need to determine marginal revenue at each level of output. Choose output that satisfies the monopolist’s profit maximizing condition of MR = MC. Does this firm earn a profit? How much profit if they do?arrow_forwardhey how are you a)Draw the cost curves for a typical firm. Explain how a competitive firm chooses the level of output that maximizes profit. At that level of output, show on your graph the firm’s total revenue and total cost. b)Draw the demand curve, marginal revenue curve, average total cost curve, and marginal-cost curve for a monopolist. Show the profit-maximizing level of output, the profit-maximizing price, and the amount of profit. c)Why the demand curve for a firm operating in monopolistic competition is more elastic compared to the firm operating as a monopoly.arrow_forwardCurrently, a monopolist's profit-maximizing output is 400 units per week and it sells its output at a price of S60 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. a. What are the firm's weekly economic profits? b. What is the firm's marginal cost? c. What is the firm's average total cost?arrow_forward
- Exercise 3.3. Suppose a profit-maximizing monopolist is producing 800 units of output and is charging a price of $40 per unit. a. If the elasticity of demand for the product is -2, find the marginal cost of the last unit produced. b. What is the firm's percentage markup of price over marginal cost? c. Suppose that the average cost of the last unit produced is $15 and the firm's fixed cost is $2000. Find the firm's profit.arrow_forwardA monopolist firm faces a demand with constant elasticity of -1.3. It has a constant marginal cost of $18 per unit and sets a price to maximize profit. If marginal cost should increase by 20 percent, would the price charged also rise by 20 percent? A. Yes. Since the price elasticity of demand is constant, P = 1.3MC. Thus, if MC increases by 20 percent, price also increases by 20 percent. B. No. Since the demand curve is downward sloping, a 20 percent increase in MC will cause the price to increase by more than 20 percent. OC. Yes. Since the price elasticity of demand is constant, P = 4.33MC. Thus, if MC increases by 20 percent, price also increases by 20 percent. OD. No. Since the demand curve is downward sloping, a 20 percent increase in MC will cause the price to increase by less than 20 percent.arrow_forwardSuppose a monopolist is currently producing where its variable costs are $1 million. Its fixed costs are $1.5 million. Its revenues are $1.2 million. Should the firm shut down in the short run? Should it leave the industry in the long run? a no; yes b no; no c yes; yes d yes; noarrow_forward
- A single-price monopolist faces an inverse market demand curve given as P (Q) = 100 − Q. The firm's total cost curve is C (Q) = 100 + 40Q + 1Q2. a. What are the equilibrium price and quantity in this market? (Find the profit maximizing quantity and price) (Round your answer to two decimal places and use it in the following parts) b. What are the firm's economic profits and economic rents? (Round your answer to two decimal places) c. What is the deadweight loss of this monopoly? (Round your answer to two decimal places)arrow_forwardCurrently, a monopolist's profit-maximizing output is 500 units per week and it sells its output at a price of $80 per unit. The firm's total costs are $6,000 per week. The firm is maximizing its profit, and it earns $35 in extra revenue from the sale of the last unit produced each week. Instructions: Enter your answers as whole numbers. a. What are the firm's weekly economic profits? %24 b. What is the firm's marginal cost? %24 c. What is the firm's average total cost? %24arrow_forward2. A monopolist faces the demand curve p=250-2q and its total cost function is given by TC = F + 10q, where F is a non-negative fixed cost. a. Find the profit-maximising price and quantity produced for the monopolist. b. What is the highest value of F that allows the firm to earn profits (of zero or more) rather than losses?arrow_forward
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