COURSE: MICROECONOMICS 2 - MONOPOLY IN DURABLE GOODS A monopolistic firm has estimated its inverse demand function as P = 200 − 0.5 Q + 40*(1/UL) with a increasing marginal cost (MC) estimated to be 10 Q. (a) Estimate effect on firm's extraordinary profit if it changes useful life (UL) of its product from 8 years to 5 years. b) What will happen to selling price?

COURSE: MICROECONOMICS 2 - MONOPOLY IN DURABLE GOODS A monopolistic firm has estimated its inverse demand function as P = 200 − 0.5 Q + 40*(1/UL) with a increasing marginal cost (MC) estimated to be 10 Q. (a) Estimate effect on firm's extraordinary profit if it changes useful life (UL) of its product from 8 years to 5 years. b) What will happen to selling price?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Monopoly

Section: Chapter Questions

Problem 1PA

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Refer to Figure 1. If the market price is $2, what the firm will do? Enable Editing 4) Use the figure below to answer the following questions. Price and cost (dollars per unit) 80 MC 60 40 ATC 20 MR 20 40 60 80 100 Quantity (units per week) Figure 2 a) Refer to Figure 2 If this firm is in monopolistic competition, what is its output? b) Refer to Figure 2 If this firm is in monopolistic competition, what is the price it will charge? c) Refer to Figure 2. What is the firm profit situation? What time frame equilibrium is the firm? d) Refer to Figure 2. If this firm in monopolistic competition is in short-run equilibrium, and the firm making profit what will happen in the long run to the firm profit? explain
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1. Given the demand function Q = 500 − 3P − 2PA + 0.01Y where P = 20, PA = 30 and Y = 5000, find (a) the price elasticity of demand (b) the cross-price elasticity of demand (c) the income elasticity of demand.If income rises by 5%, calculate the corresponding percentage change in demand. Is the good inferior or superior? (d) A monopolistic producer of two goods, G1 and G2, has a total cost function TC = 5Q1 + 10Q2 where Q1 and Q2 denote the quantities of G1 and G2 respectively. If P1 and P2 denote the corresponding prices then the demand equations are P1 = 50 − Q1 − Q2 P2 = 100 − Q1 − 4Q2Find the maximum profit if the firm’s total costs are fixed at Gh100. Estimate the new optimal profit if total costs rise to Gh101.
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. Competitors in monopolistic competition have full control over- (A) The price of their product (B) Product quality (C) The shape of the market demand curve (D) The elasticity of product substitutions 8AM
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6. Consider a monopolist with zero cost, C(Q)= 0, facing two consumers. Con- sumer 1's demand is given by P=8-Q while consumer 2's is P=8-Q. Sup- pose the monopolist can engage in second-degree price discrimination. (a) What menu of quantity-price pairs should it offer to its customers? What's the firm's profit? (b) Suppose that consumer 1's demand is instead given by P=4-1Q. What menu of quantity-price pairs should it offer to its customers? What's the firm's profit?
ev Quantity, price, total revenue, and total cost for a monopoly firm that produces cement are listed in the table below. Quantity, (Q) (tons) Price (P) Total Revenue (TR) Total Cost (TC) 1 $1,300 $1,300 $900 2 $1,215 $2,430 $980 3 $1,130 $3,390 4 $1,045 $4,180 5 $960 $4,800 6 $875 $5,250 7 $790 $5,530 Determine the firm's profit-maximizing price. Write the exact answer. Do not round. Answer S $1,100 $1,270 $1,510 $1,960 $2,560
Please no written by hand solutions 1. Assume the cost function for a monopolist is given by TC(q) = 30Q; the inverse demand function for the firms' output is p = 120 - Q, where Q is the total output. a. Find the profit-maximizing combination of price and quantity b. Estimate consumer surplus, producer surplus and the deadweight loss associated with this monopolist C. If this industry became perfectly competitive, explain and estimate the consumer surplus, producer surplus and deadweight loss of the industry d. Graph your answers for a, b, and c 2. Now assume that the monopolist above splits into two. Each of two firms has the cost function TC(q) = 30q. a. What are the firms' outputs in a Nash equilibrium of Cournot's model? b. Estimate the economic profits for each firm c. If firm 1 is the leader and firm 2 the follower, find the equilibrium outputs for the Stackelberg solution.
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