if a monopolist has an own-price demand elasticity of -.8, is it maximizing profits? Explain.
A monopoly always produces it's profit maximizing output at the point where demand curve is elastic. It doesn't produce on the inelastic portion of the demand curve because in the inelastic portion of demand curve, prices fall by a greater amount than the quantity increases. And, therefore total revenue falls.
So, if this monopolist has an own price demand elasticity of -.8 (the absolute value of the elasticity is 0.8 which is less than 1, means demand is inelastic) then it is not maximizing profit.
if a monopolist has an own-price demand elasticity of -.8, is it maximizing profits? Explain.
57. A profit-maximizing monopolist faces a downward-sloping demand curve that has a constant elasticity of -3. The firm finds it optimal to charge a price of $12 for its output. What is its marginal cost at this level of output?
Suppose a monopolist faces the constant price elasticity demand curve: p = Q? where ? < 0. The monopolist has a constant marginal cost of c. a. If ? < -1, can you determine what price and quantity will the monopolist set? Explain. b. If 0>?>-1, what is the price and quantity the monopolist will set?
10. Firm X is a monopolist that faces market demand with elasticity equal to -2, and Firm X's marginal cost of output is $24/unit. Use the mark-up formula to find Firm X's profit maximizing price. 11. Firm W is a monopolist that faces market demand with elasticity equal to -3, and Firm W's profit maximizing price is $36/unit. Use the mark-up formula to infer Firm W's marginal cost per unit at its current output level.
In a recent study it has been estimated that the own price elasticity of demand for a special type of U.S. manufactured automobile tires is - .75, while the income elasticity of demand is 1.1 and the cross price elasticity of demand with respect to foreign imports is 1.4. The current sales volume for the U.S. manufactured tires is 5 million unites per year. It is anticipated that the price of the foreign imports will rise by 5%. (a) Assuming...
Q9. The demand for widgets (Q) is given by the following equation Q 500 - 100 P. -50P, - 150 A, + 200A the price of widgets, currently at 25 P, the price of woozles, currently at 20 A,-Advertising on woozles currently at 10. A,-Advertising for widgets currently at 30 The cost per widget is currently 20 and the manufacturer where P behaves as a monopolist (a) What are current profits equal to? (b) Calculate the elasticity of demand for...
Refer to Exhibit 23-10. The profit-maximizing single-price monopolist earns profits equal to what area?
Clearly explain the relationship between own-price elasticity of demand and total expenditure (revenue). You may use either algebra or graphs to explain your answer. How is own-price elasticity of demand data useful to a seller?
Firm X is a monopolist that faces market demand with elasticity equal to -3, and Firm X's marginal cost of output is S24/u. Use the mark-up formula to find Firm X's profit maximizing price
Firm W is a monopolist that faces market demand with elasticity equal to -2, and Firm W's profit maximizing price is $48/unit. Use the mark-up formula to infer Firm W's marginal cost per unit at its current output level.
The industry elasticity of demand for gadgets is -2, while the own-price elasticity of demand for an individual gadget firm's product is -6. What is the Rothchild Index ?