Assume a (natural) monopolist operates with total costs C = 600+40Q. Market demand for their product...
Assume a (natural) monopolist operates with total costs C = 600+40Q. Market demand for their product is Q = 120 – P (hint: a diagram will help you with this question).
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a) If a regulator sets price at marginal cost in this market, what is themonopolist’s profit? Show your work.
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b) Suppose that in the absence of regulation, average cost pricing is chosen by the monopolist instead of MC pricing. Find market price, output and deadweight loss compared to the solution in a). Briefly discuss these differences.
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Assume a (natural) monopolist operates with total costs C =
600+40Q. Market demand for their product...
Problem 3: Natural Monopoly Regulation. A natural monopolist faces a demand curve P = 100-Q. The...
Problem 3: Natural Monopoly Regulation. A natural monopolist faces a demand curve P = 100-Q. The monopolist a constant marginal cost MC = 20 and an average cost AC = 20 + 800 a) In an unregulated market, what price will the monopolist charge? What is the DWL associated with this allocation? b) Suppose that a regulator imposes marginal cost regulation by setting P = 20. How many units will the monopoly sell? What is the DWL associated with this...
Consider a single-price monopolist (i.e. the monopolist cannot price discriminate) facing the following market demand curve:...
Consider a single-price monopolist (i.e. the monopolist cannot price discriminate) facing the following market demand curve: P = 120 − Q. The monopolist has constant marginal cost of $20 and zero fixed cost. (a) Determine the monopolist’s profit maximizing quantity, denoted QM, and profit maximizing price, denoted PM. (b) Determine the quantity and price that would result in the market if this instead were a competitive market, denoted QC and PC, respectively. (c) Draw a picture of the market demand...
A monopolist faces a market demand curve given by
A monopolist faces a market demand curve given by Q=70-P a. If the monopolist can produce at constant average and marginal costs ofAC-MC-6, what output level will the monopolist choose to maximize profits? What is the price at this output level? What are the monopolist's profits? b. Assume instead that the monopolist has a cost structure where total costs are described by C(Q) = 0.25Q2 - 5Q + 300. With the monopolist facing the same market demand and marginal revenue, what price-quantity combination will be chosen now...
Uniform pricing monopolist has the following demand curve for its product: C(Q)=20Q, P=100-Q. The Marginal Cost...
Uniform pricing monopolist has the following demand curve for its product: C(Q)=20Q, P=100-Q. The Marginal Cost is MC=20 and the Marginal Revenue is MR=100-2Q. 1. Find the monopolist Quantity and Price. 2.Find the Deadweight loss relative to the perfectly competitive outcome. 3. A. Calculate the welfare for the monopoly market, before and after the introduction of a price ceiling. B. Which scenario do the consumers prefer?
1. The city's Water and Sewer provider is a regulated natural monopoly that has a cost function, ...
Hi, i need help with this question
1. The city's Water and Sewer provider is a regulated natural monopoly that has a cost function, C(Q,N) 1,000 +4N+3Q, where N is the number of households, and Q is the cubic inches of water consumed per day. There are 50 high type consumers each with demand, and 30 low type consumers with demand, Each q is cubic inches consumed per household per day. Start with the assumption that the monopolist is profit...
Consider the local telephone company, a natural monopoly. The following graph shows the demand curve for...
Consider the local telephone company, a natural monopoly. The following graph shows the demand curve for phone services, the company's marginal revenue curve (labeled MR), Its marginal cost curve (labeled MC), and its average total cost curve (labeled ATC). You can hover over the points on the graph to see their exact coordinates. PRICE (Dollars per month) 200 180 ATC 160 140 120 100 Demand 80 60 40 MC 20 MR - 0 6 12 18 24 30 36 42...
The inverse demand curve for a firm with market power is P = 120 – Q,...
The inverse demand curve for a firm with market power is P = 120 – Q, and its marginal cost is given by MC = 2Q. If the firm is able to practice perfect first-degree price discrimination (instead of behaving as a single-price monopolist), the deadweight loss will _________ (increase or decrease) from $ _______ to $ _______ .
A monopolist operates at a constant marginal cost MC 2 zloty, and the market demand function...
A monopolist operates at a constant marginal cost MC 2 zloty, and the market demand function for the good it produces is Q 7000/p. If as a result of the fact that the govemment imposed a unit tax, the sale price in equilibrium increased to the level p 6 zloty, what was the level of this tax?
1. Let the market demand curve be P=1000 - 10Q. Assume the market is controlled by...
1. Let the market demand curve be P=1000 - 10Q. Assume the market is controlled by a monopolist. Let fixed cost be $10,000 and Marginal Costs (MC)=20Q. a) What is the profit maximizing output? b) What is the monopolist's total revenue at the profit maximizing output? c) How much profit is the monopolist earning? d) Assume the government breaks up the monopolist in order to create a perfectly competitive market of identical firms. Assume the MC curve is now the...
Consider the local telephone company, a natural monopoly. The following graph shows the demand curve for...
Consider the local telephone company, a natural monopoly. The following graph shows the demand curve for phone services, the company's marginal revenue curve (labeled MR), its marginal cost curve (labeled MC), and its average total cost curve (labeled ATC). You can hover over the points on the graph to see their exact coordinates. PRICE, COST, MR (Dollars per month) 100 90 80 70 60 Demand 50 40 30 ATC 20 MC 10 MR 54 60 30 36 42 48 0...
Problem 3: Natural Monopoly Regulation. A natural monopolist faces a demand curve P = 100-Q. The monopolist a constant marginal cost MC = 20 and an average cost AC = 20 + 800 a) In an unregulated market, what price will the monopolist charge? What is the DWL associated with this allocation? b) Suppose that a regulator imposes marginal cost regulation by setting P = 20. How many units will the monopoly sell? What is the DWL associated with this...
Hi, i need help with this question
1. The city's Water and Sewer provider is a regulated natural monopoly that has a cost function, C(Q,N) 1,000 +4N+3Q, where N is the number of households, and Q is the cubic inches of water consumed per day. There are 50 high type consumers each with demand, and 30 low type consumers with demand, Each q is cubic inches consumed per household per day. Start with the assumption that the monopolist is profit...
Consider the local telephone company, a natural monopoly. The following graph shows the demand curve for phone services, the company's marginal revenue curve (labeled MR), Its marginal cost curve (labeled MC), and its average total cost curve (labeled ATC). You can hover over the points on the graph to see their exact coordinates. PRICE (Dollars per month) 200 180 ATC 160 140 120 100 Demand 80 60 40 MC 20 MR - 0 6 12 18 24 30 36 42...
A monopolist operates at a constant marginal cost MC 2 zloty, and the market demand function for the good it produces is Q 7000/p. If as a result of the fact that the govemment imposed a unit tax, the sale price in equilibrium increased to the level p 6 zloty, what was the level of this tax?
Consider the local telephone company, a natural monopoly. The following graph shows the demand curve for phone services, the company's marginal revenue curve (labeled MR), its marginal cost curve (labeled MC), and its average total cost curve (labeled ATC). You can hover over the points on the graph to see their exact coordinates. PRICE, COST, MR (Dollars per month) 100 90 80 70 60 Demand 50 40 30 ATC 20 MC 10 MR 54 60 30 36 42 48 0...
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