6. A monopolist firm has two long-run choices: producing with short-run cost function C(q) = 30 + 5q, or exiting the market. If the inverse demand function of the market is p(g) = 15 – q, will the monopolist shut down in the short run? Will it exit the market in the long run? A. Shut down in the short run; exit in the long run B. Shut down in the short run; not exit in the long run C. Not shut down in the short run; exit in the long run D. Not shut down in the short run; not exit in the long run

6. A monopolist firm has two long-run choices: producing with short-run cost function C(q) = 30 + 5q, or exiting the market. If the inverse demand function of the market is p(g) = 15 – q, will the monopolist shut down in the short run? Will it exit the market in the long run? A. Shut down in the short run; exit in the long run B. Shut down in the short run; not exit in the long run C. Not shut down in the short run; exit in the long run D. Not shut down in the short run; not exit in the long run

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.5P

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The inverse demand function in the industry is p(y)=10-2y. The marginal costs are constant and equal 2, the fixed costs are zero. a. If the industry is perfectly competitive, what are the equilibrium output and price? b. If there is a single monopolist in the industry, what are the equilibrium output and price? What is the profit? c. Suppose now that the monopolist can perfectly discriminate all customers and charge different prices. How many units will be sold and what will be the profit? d. Find the deadweight loss due to monopolies in parts b. and c.?
Currently, a monopolist's profit-maximizing output is 400 units per week and it sells its output at a price of S60 per unit. The firm's total costs are $10,000 per week. The firm is maximizing its profit, and it earns $40 in extra revenue from the sale of the last unit produced each week. a. What are the firm's weekly economic profits? b. What is the firm's marginal cost? c. What is the firm's average total cost?
2. A monopolist faces the demand curve p=250-2q and its total cost function is given by TC = F + 10q, where F is a non-negative fixed cost. a. Find the profit-maximising price and quantity produced for the monopolist. b. What is the highest value of F that allows the firm to earn profits (of zero or more) rather than losses?
1. The inverse demand function for a monopolist's product is given by P=21-2Q. What is the maximum price per unit a monopolist can charge to be able to sell 6 units? What is marginal revenue when Q=6? Show your solution 2. Suppose the inverse demand function for a Meralco's service is given by P= 83 -2Q and the cost function is C=12 + 2Q. Required: Compute the profit-maximizing price, quantity and maximum profits.
hey how are you a)Draw the cost curves for a typical firm. Explain how a competitive firm chooses the level of output that maximizes profit. At that level of output, show on your graph the firm’s total revenue and total cost. b)Draw the demand curve, marginal revenue curve, average total cost curve, and marginal-cost curve for a monopolist. Show the profit-maximizing level of output, the profit-maximizing price, and the amount of profit. c)Why the demand curve for a firm operating in monopolistic competition is more elastic compared to the firm operating as a monopoly.
A single-price monopolist faces an inverse market demand curve given as P (Q) = 100 − Q. The firm's total cost curve is C (Q) = 100 + 40Q + 1Q2. a. What are the equilibrium price and quantity in this market? (Find the profit maximizing quantity and price) (Round your answer to two decimal places and use it in the following parts) b. What are the firm's economic profits and economic rents? (Round your answer to two decimal places) c. What is the deadweight loss of this monopoly? (Round your answer to two decimal places)
How much is total surplus if the market is perfectly competitive?How much is total surplus if the market is controlled by a single price monopolist?Suppose the single price monopolist started charging all customers the maximum price they are willing to pay. How much additional surplus is created?
5. A monopolist with cost function c(Q)=faces an inverse demand function given by P(Q)= √Q' (a) Find the elasticity of demand with respect to price. (b) Assuming that the monopolist uses MR = MC pricing rule, find his profit maximizing price, p", and output level, q". (c) Find the marginal cost at q" and calculate the Lerner index. (d) Does the monopolist's market power depend on his cost curve? In particu- lar, does it depend on a? Is your answer surprising?
1. Suppose that a monopolist has a patent for widgets and the market demand curve Q(P) is:Q(P) = 60 – 2P,where P is the price in dollars and Q is quantity.A. If MR(Q) > 0, then total revenue increases by selling more units. If MR(Q) < 0, then total revenueincreases by selling fewer units. Calculate the Q* such that MR(Q*) = 0: this will be where total revenueis maximized.B. Determine the price P* the monopolist must charge in order to sell Q* units by plugging your answer forQ* into the inverse demand curve P(Q). C. Neatly draw a graph showing the demand curve for widgets and the marginal revenue curve, carefullyshowing the vertical and horizontal intercepts. Also show Q* and P*. PLEASE SHOW ALL WORK
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3. Suppose a software monopolist faces two markets for its software, students and professionals. The demand curve of professionals is given by Qp = 200-2Pp and the demand curve by students is given by Qs = 150 - 3Ps. The firm's cost function is C(Q) = 400+5Q. (a) If the firm can price discriminate, what price should it charge in each market to maximize profits? How much profit does it earn? (b) If the firm cannot price discriminate, what price should it charge? Verify that it sells to both markets at this price. How much profit does it earn? Hint: If the firm cannot price discriminate, this means it must treat the two markets as a single combined market.
19. Firm A is monopolist in x market, and it consumes one unit of y in order to produce one unit of x. It costs 5 + py TL to produce one unit of x. (py is the price of product y.) y is produced by a monopolist, B, and it costs 5 TL to produce one unitf of y. The demand for x is defined by px = 50-qx (px product price, qx quantity demanded). a) Assume that px is set by Firm A and py is set by Firm B. What would be the equilibrium prices for products x and y? Calculate Firm A and B's profits. b) Assume that Firms A and B merge together. What would be the equilibrium prices for products x and y? Calculate the profits of the new firm. c) Would the merger between A and B increase the consumer surplus? Why (not)?