Problem 4 A yoga studio faces consumers whose inverse demand for yoga classes is given by...
Problem 4 A yoga studio faces consumers whose inverse demand for yoga classes is given by p = 40 – Q, where Q is the number of yoga classes each consumer takes and p is the price per yoga class. Suppose that the studio incurs a cost of 20 per student per yoga class. (a) Which price will the yoga studio set if it can only charge a uniform price (i.e., constant price per class)? How many classes will each student take? (b) Now suppose that yoga studio can sell a card that allows card holders to take N classes. The price of the card is T. Which N and T will the yoga studio choose if it wishes to maximize its profits? (c) Now suppose that instead of selling a card, the yoga studio asks consumers to register as members. The membership fee is M. Once registered as a member, a consumer may take as many classes as a he likes at a price of p per class. Which M and p will the yoga studio choose if it wishes to maximize its profits?
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Problem 4 A yoga studio faces consumers whose inverse demand for
yoga classes is given by...
1. Suppose that demand is given by P=100-Q, marginal revenue is MR=100-2Q, and marginal cost (and...
1. Suppose that demand is given by P=100-Q, marginal revenue is MR=100-2Q, and marginal cost (and average cost) is constant at 20. a. What single price will maximize a monopolist's profit? b. What will be the prices and quantity under two-part pricing? It involves a lump sum fee (e.g., membership fee) equal to the consumer surplus at competitive prices and user fees (i.e., unit price) equal to the competitive price. c. Now the monopolist has another group of consumers whose...
A monopolist has a cost function given by c(y) = y and faces an inverse demand...
A monopolist has a cost function given by c(y) = y and faces an inverse demand curve given by P(y) = 156.00 - y, where P is the per-unit price and y is the quantity of output sold. Assume this monopolist cannot discriminate and charges a single price. What is the profit-maximizing level of output? What is its profit-maximizing price? $ Part 2 (2 points) See Hint Assume you want to choose a price ceiling for this monopolist so as...
A monopolist faces a market demand curve given by
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1) All 20 consumers are alike and each has a demand curve for a monopolist's product...
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Suppose a monopolist faces a market demand of P = 48 - 4Q. The monopolist has...
Suppose a monopolist faces a market demand of P = 48 - 4Q. The monopolist has a constant marginal cost of 8 per unit. If the monopolist can only charge a single price to consumers, how many units should the monopolist produce to maximize profits? 10 5 12 6
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...
• An incumbent sells steel and faces a potential entrant. • Inverse demand curve for steel...
• An incumbent sells steel and faces a potential entrant. • Inverse demand curve for steel sales is given by by P = 400 – Q, where Q is the total amount sold by both firms. • The marginal cost to transport one customer is MC = 100 • The entrant incurs fixed costs of F. (a) What are the Cournot prices and quantities in the market, assuming the entrant enters? (b) What are the Stackelberg prices and quantities in...
21. A music studio faces the following demand schedule when releasing the next Compact Disc by...
21. A music studio faces the following demand schedule when releasing the next Compact Disc by Bruno Mars. The studio must pay Mr. Mars $12 million to make the CD, and the marginal cost of printing the CD is always $3 per disc. P is price, in dollars; Q is quantity demanded, listed in millions of CDs. Calculate total revenue, marginal revenue, fixed cost, marginal cost, variable cost, total cost, and profit for each quantity listed (if a column is...
29 1 point Afirm with market power knows that an individual consumer has the following demand...
29 1 point Afirm with market power knows that an individual consumer has the following demand function: Q= 36 – 4P where Q stands for the quantity demanded by one consumer and P stands for the price. Suppose all customers are identical. The cost function for the firm C = 70. The firm wants to use a two-part tariff to sell this product. Recall that a two part tariff consists of an entry fee and a price per unit (just...
4. Suppose that a monopoly faces inverse demand given by P = 12-Q and has marginal...
4. Suppose that a monopoly faces inverse demand given by P = 12-Q and has marginal cost equal to $2. (a) (5 points) Determine the equilibrium price, denoted by P (b) (5 points) If the market was instead served by perfectly competitive firms, then what is the equilibrium price? Denote it by P. (e) (4 points) If the monopolist can charge an entry fee in addition to its price P, then what is the optimal entry fee in this case?...
1. Suppose that demand is given by P=100-Q, marginal revenue is MR=100-2Q, and marginal cost (and average cost) is constant at 20. a. What single price will maximize a monopolist's profit? b. What will be the prices and quantity under two-part pricing? It involves a lump sum fee (e.g., membership fee) equal to the consumer surplus at competitive prices and user fees (i.e., unit price) equal to the competitive price. c. Now the monopolist has another group of consumers whose...
A monopolist has a cost function given by c(y) = y and faces an inverse demand curve given by P(y) = 156.00 - y, where P is the per-unit price and y is the quantity of output sold. Assume this monopolist cannot discriminate and charges a single price. What is the profit-maximizing level of output? What is its profit-maximizing price? $ Part 2 (2 points) See Hint Assume you want to choose a price ceiling for this monopolist so as...
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...
29 1 point Afirm with market power knows that an individual consumer has the following demand function: Q= 36 – 4P where Q stands for the quantity demanded by one consumer and P stands for the price. Suppose all customers are identical. The cost function for the firm C = 70. The firm wants to use a two-part tariff to sell this product. Recall that a two part tariff consists of an entry fee and a price per unit (just...
4. Suppose that a monopoly faces inverse demand given by P = 12-Q and has marginal cost equal to $2. (a) (5 points) Determine the equilibrium price, denoted by P (b) (5 points) If the market was instead served by perfectly competitive firms, then what is the equilibrium price? Denote it by P. (e) (4 points) If the monopolist can charge an entry fee in addition to its price P, then what is the optimal entry fee in this case?...
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