Homework Answers
a. Monopoly produces at MC=MR
120-4Q=4Q
Q*= 120/8= 15
P*=120-2*15=$90
Producer surplus is the area below the price level and above the MC curve.
Producer surplus= (90-60)*15+0.5*(15)(60)= 450+450=$900
b. When P=MC
120-2Q=4Q
Q=120/6=20
Deadweight loss is the potential gain that did not go to consumer or producer.
Deadweight loss=0.5(90-60)(20-15)=$75
c. Producer surplus under perfect discrimination is the area below the demand curve and above the MC curve till Efficient quantity.
Producer surplus= 0.5(120)(20)=$1200
Add Answer to:
Problem 3: A market with a monopoly producer has inverse demand P = 120 - 2Q...
Hints: In problem 11.7 the marginal cost is 20. For both problems it will be useful...
Hints: In problem 11.7 the marginal cost is 20. For both problems it will be useful to know that for a linear demand curve, written with price as a function of quantity (P=0-bQ) marginal revenue is MR=a-2bQ. For problem 12.20, for some steps you will have to re-arrange the demand so to give price as a function of quantity rather than quantity as a function of price. Part a of 12.20 is the same as what we did in the...
3. Monopoly Consider a situation where a monopolist faces the following inverse market demand curve 132...
3. Monopoly Consider a situation where a monopolist faces the following inverse market demand curve 132 - 2a p and the following cost function TС — 12g + 2q* a) Derive the marginal revenue and marginal cost functions b) What are the equilibrium price and quantity if this market behaved as if it were competitive? c) Calculate the Consumer Surplus, Producer Surplus and Welfare levels under perfect petition d) What are the equilibrium price and quantity when the monopolist produces...
A monopolist’s inverse demand is P=500-2Q, the total cost function is TC=50Q2 + 1000Q and Marginal...
A monopolist’s inverse demand is P=500-2Q, the total cost function is TC=50Q2 + 1000Q and Marginal cost is MC=100Q+100, where Q is thousands of units. a). what price would the monopolist charge to maximize profits and how many units will the monopolist sell? (hint, recall that the slope of the MARGINAL Revenue is twice as steep as the inverse demand curve. b). at the profit-maximizing price, how much profit would the monopolist earn? c). find consumer surplus and Producer surplus...
3. The market illustrated below has inverse demand p(Q) = 130 - 3Q and industry-wide marginal...
3. The market illustrated below has inverse demand p(Q) = 130 - 3Q and industry-wide marginal cost MCQ) = 10 + 2Q. If production is competitive, this is the market (inverse) supply curve. If production is consolidated under a monopolist, this is the monopolist's MC curve. a. Suppose there is a monopolist. Explain how marginal revenue for a monopolist is different than for a firm under perfect competition. Then derive the profit-maximizing market outcome (including the monopoly price and quantity...
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 $ _______ .
MR = 100 - 2q MC = 4 + 2q Under Perfect Competition EQ Price = 68 EQ Quantity = 32 CS = 512 PS = 1024 TW = 1536 Under M...
MR = 100 - 2q
MC = 4 + 2q
Under Perfect Competition
EQ Price = 68
EQ Quantity = 32
CS = 512
PS = 1024
TW = 1536
Under Monopoly
EQ Quantity = 24
EQ Price = 76
Now ...
Calculate the Consumer Surplus, Producer Surplus and Welfare
levels under monopoly.
How much deadweight loss does the monopolist create?
What could the government do to regulate the monopolist?
Consider a situation where a monopolist faces the following inverse...
7. A monopolist in the market for widgets is facing a demand curve P= 60 -...
7. A monopolist in the market for widgets is facing a demand curve P= 60 - Q. The marginal cost of producing Q units is equal to $Q. (a) Calculate the monopolist's profit maximizing price and quantity. Calculate producer, consumer, and total surplus, and deadweight loss. (b) The government wants to impose a price ceiling that will maximize the total surplus in the market. What price ceiling should the government set? What would be the new values of consumer and...
Suppose that a monopoly faces inverse market demand function as P = 70−2Q, and its marginal...
Suppose that a monopoly faces inverse market demand function as P = 70−2Q, and its marginal cost function is MC = 40 – Q. Please answer the following two questions: a. What should be the monopoly’s profit-maximizing output? b. What is the monopoly’s price?
Scenario 11.1 Maui Macadamia Inc. has a monopoly in the macadamia nut industry. The demand curve,...
Scenario 11.1 Maui Macadamia Inc. has a monopoly in the macadamia nut industry. The demand curve, marginal revenue and marginal cost curve for macadamia nuts are given as follows: P = 360 - 4Q; MR = 360 - 8Q; MC = 4Q 1. What level of output maximizes the sum of consumer surplus and producer surplus? 2. What is the profit-maximizing level of output? 3. At the profit-maximizing level of output, what is the level of consumer surplus? 4. At...
1. You have the following information about a monopolist p = 60 − 2q (1) MR...
1. You have the following information about a monopolist p = 60 − 2q (1) MR = 60 − 4q (2) MC = 40 (3) where equation (1) is the demand curve, equation (2) is the marginal revenue function, and equation (3) is the marginal cost function, assumed to be constant here. (i). Under the perfect competition outcome, what would be the profit-maximizing level of output (qc) and price (pc)? (ii). Under the monopoly outcome, what would be the profit-maximizing...
Hints: In problem 11.7 the marginal cost is 20. For both problems it will be useful to know that for a linear demand curve, written with price as a function of quantity (P=0-bQ) marginal revenue is MR=a-2bQ. For problem 12.20, for some steps you will have to re-arrange the demand so to give price as a function of quantity rather than quantity as a function of price. Part a of 12.20 is the same as what we did in the...
3. Monopoly Consider a situation where a monopolist faces the following inverse market demand curve 132 - 2a p and the following cost function TС — 12g + 2q* a) Derive the marginal revenue and marginal cost functions b) What are the equilibrium price and quantity if this market behaved as if it were competitive? c) Calculate the Consumer Surplus, Producer Surplus and Welfare levels under perfect petition d) What are the equilibrium price and quantity when the monopolist produces...
3. The market illustrated below has inverse demand p(Q) = 130 - 3Q and industry-wide marginal cost MCQ) = 10 + 2Q. If production is competitive, this is the market (inverse) supply curve. If production is consolidated under a monopolist, this is the monopolist's MC curve. a. Suppose there is a monopolist. Explain how marginal revenue for a monopolist is different than for a firm under perfect competition. Then derive the profit-maximizing market outcome (including the monopoly price and quantity...
MR = 100 - 2q
MC = 4 + 2q
Under Perfect Competition
EQ Price = 68
EQ Quantity = 32
CS = 512
PS = 1024
TW = 1536
Under Monopoly
EQ Quantity = 24
EQ Price = 76
Now ...
Calculate the Consumer Surplus, Producer Surplus and Welfare
levels under monopoly.
How much deadweight loss does the monopolist create?
What could the government do to regulate the monopolist?
Consider a situation where a monopolist faces the following inverse...
7. A monopolist in the market for widgets is facing a demand curve P= 60 - Q. The marginal cost of producing Q units is equal to $Q. (a) Calculate the monopolist's profit maximizing price and quantity. Calculate producer, consumer, and total surplus, and deadweight loss. (b) The government wants to impose a price ceiling that will maximize the total surplus in the market. What price ceiling should the government set? What would be the new values of consumer and...
Most questions answered within 3 hours.
-
2. Calculate the moment of inertia for a solid cylinder with a
mass of 100g and...
asked 42 seconds ago -
I have a table but while I was practicing with the other
examples I notice that...
asked 6 minutes ago -
A glass electrode is calibrated using two standards and the
voltage of the electrode in each...
asked 7 minutes ago -
I need new and unique answers, please. (Use your own
words, don't copy and paste), Please...
asked 12 minutes ago -
What is the silver ion concentration in a solution prepared by
mixing 475 mL 0.369 M...
asked 22 minutes ago -
QUESTION 1
What does “ICE” stand for, with respect to chemical
reactions?
Immigration and Customs
Enforcement...
asked 22 minutes ago -
34. Determine the internal rate of return for a project that
costs -$156,000 and would yield...
asked 23 minutes ago -
At the equator, near the surface of the Earth, the magnetic
field is approximately 50.0 μT...
asked 39 minutes ago -
Implement a class to represent a cash register. At the start of
each transaction, the amount...
asked 45 minutes ago -
A 148-Mg railroad locomotive can exert a 221 kN force.
A)At what rate can it accelerate...
asked 45 minutes ago -
What are the important complementary goods and enabling
technologies for the air taxi market? Are they...
asked 45 minutes ago -
Combustion of hydrocarbons such as pentane (C5H12) produces
carbon dioxide, a "greenhouse gas." Greenhouse gases in...
asked 49 minutes ago