4. There are n firms in a competitive industry, with the following market p=50-2Q. A firm's cost function is q². To mitigate the negative impact of the pandemic, the government provides a per-unit subsidy s> 0 to the firms. That is, for each unit of goods sold, the firm receives p+s in total, where p is paid by consumers and s by the government. So the profit of a firm is π = (p+s)q-q². Derive the consumer surplus, denoted by CS. Is this subsidy policy effective at stimulating goods surply and benefiting consumers? Explain the intuition of your answer. demand:

4. There are n firms in a competitive industry, with the following market p=50-2Q. A firm's cost function is q². To mitigate the negative impact of the pandemic, the government provides a per-unit subsidy s> 0 to the firms. That is, for each unit of goods sold, the firm receives p+s in total, where p is paid by consumers and s by the government. So the profit of a firm is π = (p+s)q-q². Derive the consumer surplus, denoted by CS. Is this subsidy policy effective at stimulating goods surply and benefiting consumers? Explain the intuition of your answer. demand:

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.8P

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E3 A monopolist faces market demand Q = 500 - 10 P, and has a marginal cost curve equal to MC = Q/10 - 10. I have computed the marginal revenue curve fro you which is given by MR = 50 - Q/5. If the firm is a single price monopolist, find the profit maximizing price and quantity and the resulting profit to the monopoly.What is the socially optimal price and quantity? What is the firm's profit at this price and quantity?Show (1) and (2) on a graph.Calculate consumer surplus (CS) and producer surplus (PS) and total surplus for parts (1) and (2). Show CS, PS, and DWL on the graph. Calculate the DWL due to monopoly.If the firm engages in first degree price discrimination, find the profit maximizing quantity and the resulting profit to the monopoly.Between (1) and (5), which pricing scheme is preferred by the monopolist and which by the consumers? why?
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Suppose that the figure given below depicts the demand for grape oll, which can be purchased in any quantities and sold at any price. Price per litre 6 5 A 3 2 1 0 D 100 200 300 400 500 600 700 800 900 1000 Quantity per period a) What is the total consumer surplus if the price per litre is $3.0? (Hint: Area of a triangle?) Total consumer surplus: $ b) What is the total consumer surplus if the price per litre is $1.0? Total consumer surplus: $
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A college has two types fo students: students from middle-income families who have an estimated price elasticity of demand equal to -1 1/2 and students from lower-income families who have an estimated price elasticity of demand equal to -2 1/2. The colleges marginal cost for providing one-year's academic credit is $4,500 regardless of which student is receiving the education. a. What annual tuition (price) should the college establish for students from middle-income families? b. What annual tuition(price) should the college establish for students from lower-income families?
Currently the market for domestic air travel in OzLand is a monopoly with Qanwings as the supplier. A new supplier, Cheap Flights, enters the market. Suppliers in the market compete by simultaneously choosing the quantity of flights they will supply. Which of the following is most likely to occur after the entry of the new supplier to the market for domestic air travel? a.The total quantity of flights will increase. b.The total quantity of flights will not change. c.The total quantity of flights will decrease. d. It is not possible to say what will happen to the quantity of flights.
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The following table displays the marginal costs (MC) of Les, the sole producer in the market, and the marginal benefits (MB) of Eddie, the sole consumer in the market: Quantity of Guitars 1 2 3 4 5 6 7 MC of Les 800 1000 1200 1500 1800 2200 2700 MB of Eddie 2700 2200 1800 1500 1200 1000 800 Assume now that Leo, the minister of guitars, sets a price floor at $1800. What is the market deadweight loss?
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