2. Aviation Alvonia (AA) is a single price monopolist constructing airports in the country of Alvonia. The demand for co...
2. Aviation Alvonia (AA) is a single price monopolist constructing airports in the country of Alvonia. The demand for constructing airports is given by P = 120 − 2Q. The marginal cost of constructing an airport is MC = 2Q.
(a) Model the market for airports in Alvonia graphically. Label MC, MR and demand curves.
(b) How many airports QM does AA construct to maximize profits? What price PM do they charge?
(c) What is the total surplus at this quantity? Show your work. Suppose that the noise and air pollution associated with airports generate a harm on people living nearby, captured by the marginal external cost MEC = 20.
(d) Write the equation of the social marginal cost SMC and plot it in the graph from part (2a). What is the socially efficient quantity QE?
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2. Aviation Alvonia (AA) is a single price monopolist constructing airports in the country of Alvonia. The demand for co...
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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...
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Consider a monopolist facing the demand curve p = 90 − 2q with cost function c(q) = 0.25q^2 . (a) Find the profit-maximi...
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4. (* pts) A single-price monopolist produces pins, measured in pounds. Demand for pins is captured by P-1000-1002, where Preflects the price and Qreflects the market quantity. Marginal revenues are captured by MR 1000 - 200Q. Marginal costs are constant at 200. Total fixed costs are 500 4.1. (* pts) Identify the monopolist's chosen quantity of pins. 4.2. (* pts) Identify the monopolist's chosen price for pins $/lb 4.3.(* pts) Assume the chosen quantity is 5 and the chosen price...
1. Suppose that a single-price monopolist faces the demand function P 100 Q where I is average weekly household income, and that the firm's marginal cost function is given by MC(Q) 2Q. The firm has no fixed costs. = (a) If the average weekly household income is $600, find the firm's marginal revenue function. (b) What is the firm's profit-maximizing quantity of output? At what price will the firm sell that output? What will the firm's marginal cost be? (c)...
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