Suppose that the Department of Justice (DOJ) vetoes all mergers that are likely to lead to an increase in price of the product. The market demand function is given by P(Q) = 50 – Q. Pre- merger, the market is competitive and the cost function is given by C(Q) = 30Q. Post-merger, the market will be controlled by a monopolist and C(Q) = xQ. For what values of r will the DOJ approve this merger?
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- A wholesaler (upstream firm) sells a product to a retailer (downstream firm). Both the wholesaler and the retailer are monopolists. The wholesaler faces a constant marginal cost of $2 and charges the retailer a wholesale price w. The retailer resells the product to final consumers at price P and the wholesale price w is its only cost. The demand for the good is P = 12 - Q. For your calculations below, assume that both the P and w are measured in dollars per unit. Hint: The retailer's profit function is π = (Pw)Q. a Find the profit-maximizing retail and wholesale prices and quantities.There are two potential suppliers i=1,2 in a market. The cost of production are given by: C(q) =a +8. P(Q)=10-Q, with Q.9,. If both firms are present in the market, there is Cournot competition. a) Derive the equilibrium profits if both firms are active in the market. Is there a natural monopoly? There is a discussion to found a new regulatory agency. b) Suppose that the agency can only regulate the price. What price level should be regulated to maximize total welfare (ideal price regulation) assuming that one firm is active. c) What would the welfare optimal regulation of the agency be if it has to ensure that any regulated firm that is supposed to be active in the market makes non-negativeA monopolist faces a market demand Q(p)=1500-5p and has cost function C(q)-120q. Suppose that the government intervenes the market and splits the monopolist into two firms with cost functions C₁(91)=120q1 and C₂(92)=120q2. If the newly created firms compete in Cournot model, then the total profit level of the two firms is? 40500 18000 36000 20250 10125 TRG
- There are two types of consumers: one half of consumers are type 1 (low type) and the other half are type 2 (high type). Type l's demand curve is q1 = 4 – P, while type 2's demand is given by q2 = 6 – P. Consider a monopolist selling its product to these consumers. Assume that the marginal cost is equal to zero. However, the firm does not know an individual consumer's type. It only knows that there are two types of consumers with demand curves given as above. Suppose that the firm can offer only a single two-part tariff, (T, P), where T is the lump-sum fee and P is the unit price. (1) T and P? Also, compute the resulting profit. If the firm serves only high type consumers, what should be the optimal two-part tariff, If the firm serves both types of consumers, what is the firm's profit when it offers (T, P)? (2) Find the expression in terms of P only. (3) well as the resulting profit. Compute P that maximizes the firm's profit in (2). Also, compute the optimal T, as (4) tariff will be…Andrew runs a nightclub called “Fun1040". Given the popularity and cache of the club, he has a monopoly position in the market. Males nightclub goers have an individual demand curve of P =16 - q, whereas female customers each have an individual demand curve of P = 22 - q. Andrew has a marginal cost per drink of MC = $2 per unit and no fixed cost. By law, Andrew is unable to charge an entrance fee. He can, however, charge different prices for men and women for their drinks (by serving men blue glasses and women customers their drinks in green glasses). If Andrew tries to maximise profit, which statement is true? O Andrew charges both men and women $12 per drink; this is fırst-degree price discrimination. O Andrew charges men $9 per drink and women $12 per drink; this is an example of third-degree price discrimination. O Andrew charges men $12 per drink and women $9 per drink; this is an example of third-degree price discrimination. O Andrew charges men $10 per drink and women $7 per…Based on the best available econometric estimates, the market elasticity of demand for your firm's product is -2. The marginal cost of producing the product is constant at $150, while average total cost at current production levels is $225. Determine your optimal per unit price if: a. you are a monopolist b. you compete against one other firm in a Cournot oligopoly c. you compete against 19 other firms in a Cournot oligopoly
- A market comprises two consumers groups: high-demand types and low-demand types. Assume there are 100 consumers of each type. The high types have demand QH = 14 – Pand low types have demand QL = 12 - P. Assume the marginal (and average) cost is 4 and there are no fixed costs. If the monopolist firm is able to distinguish between the two consumer types and using block pricing to extract maximum profit, how much profit will they earn in total? Select one: а. 9000 b. 6800 C. 8200 d. 7200A wholesaler (upstream firm) sells a product to a retailer (downstream firm). Both the wholesaler and the retailer are monopolists. The wholesaler faces a constant marginal cost of $2 and charges the retailer a wholesale price w. The retailer resells the product to final consumers at price Pand the wholesale price w is its only cost. The demand for the good is P = 12 – Q. For your calculations below, assume that both the P and w are measured in dollars per unit. Hint: The retailer's profit function is T = (P – w)Q. a Find the profit-maximizing retail and wholesale prices and quantities.You are a duopolist producer of a homogeneous good. Both you and your competitor have zero marginal costs. The market demand curve is P=24-Q where Q=Q₁ +Q₂. Q₁ is your output and Q₂ is your competitor's output. Your competitor has also read this book. Total revenue (TR) for your firm will be and total revenue for your competitor's firm will be In turn, marginal revenue (MR) for your firm will be and marginal revenue for your competitor's firm will be TR₁ = (24-Q₁-Q₂)Q₁ minus TR₂ = (24-Q₁-Q₂) Q₂. MR₁ = 24-2Q₁-Q₂ MR₂ = 24-Q₁-2Q₂- Suppose you will play this game only once. If you and your competitor must announce your outputs at the same time, how much will you choose to produce? (Enter all numeric responses rounded to two decimal places.) You will produce units of output. What do you expect your profit to be? Explain. Profit will be $, from Suppose you are told that you must announce your output before your competitor does. How much will you produce in this case, and how much do you…
- The supply chain for Pappy Van Winkle bourbon is characterized by a monopolist upstream producer and a competitive downstream retail sector. Final consumers’ demand for Pappy Van Winkle bourbon is given as: P=140-2Q, where Q is the number of bottles that are purchased each day. The marginal cost of production (i.e., performing the manufacturing function) can be written as: MCM=30+2Q, and the marginal cost of performing the retail function is MCA=20. Suppose that the two firms are not vertically integrated. Construct the final consumers’ demand curve.Suppose that a unique technology is developed that allowed for the production of lightsabers. The inspired entrepreneur (let's say, Lucas George) who developed the technology immediately slaps a patent on the design and hoards kyber crystals (necessary input). Demand and production costs are given below: P(Q) = 14,000 - 600Q C(Q) = 3,000 + 100² 1. How much profit does Lucas the monopolist earn? 2. Solve for the market failure of Lucas operating as a monopolist relative to what would be observed if Lucas operated as a competitive firm. Martin the Martian (not to be confused with any other martian that might be copyrighted...) observes the profits being made by Lucas. Determining that ray guns are not that different from lightsabers, Martin begins competing with Lucas: P'(Q) = 12,000 - 600Q' 3. A third potential business owner, Dr. When, has watched this market carefully and is trying to decide whether or not to market her Sonic Screwdriver (a near-substitute). Based on your previous…A city in a developing country does not have a provider of water and sanitation services, leading to poor health outcomes for its citizens. A firm is considering entering thatmarket. The cost curve is C(g) = 10 + 2q, and the inverse demand is P(g) = 10-q. Thegovernment of that city knows that, because of the high fixed cost to operate in this market, any entrant is likely to become a monopolist. Thus, they decide to implement the following regulation: the firm is not allowed to choose a price above an upper limit of p (which the government chooses and sets in the law before the firm decides to enter).There will be no transfers between the government and the firm.Assume that the firm only enters the market if it can get profits of at least zero, given the government's choice of p. Suppose that the government's goal is to maximize consumer surplus. Which of the following statements is the most correct? The government needs to set p = 2, because it's the marginal cost. That eliminatesthe…