Suppose that the monopolist can prevent the existence of a second-hand market. In other words, there can be no resale of the product between consumers after the initial purchase from the monopolist. What would the profit be for the monopolist from charging only one price to the entire market?
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Suppose that the monopolist can prevent the existence of a second-hand market. In other words, there can be no resale of the product between consumers after the initial purchase from the monopolist. What would the profit be for the monopolist from charging only one price to the entire market?
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Again, with no second-hand market possible, suppose the monopolist can distinguish between type H and type L consumers and can offer a discount to type L consumers. What are the profit-maximizing prices the monopolist will charge? How many units of the good will each type of consumer buy? What will the monopolist’s total profit be?
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What is total
consumer surplus with only one price (part a)? What is total consumer surplus with 3rd degreeprice discrimination (part b)?
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- Suppose a monopolist faces a market demand that is the first two columns in the table below. Also, in the short run, assume that Total Fixed Cost equals $100 and the monopolist has Total Variable Cost according to the table. Find Total Revenue for each price and quantity combination, and then Marginal Revenue as price falls and quantity increases. Fill in the rest of the costs in the table and find profit at each price and quantity combination as the difference between Total Revenue and Total Cost. If profit is less than zero that indicates a loss. What is the maximum profit you found in this table? At what quantity and price combination is profit maximized for this monopolist? Next, verify this result by using Marginal Analysis to find the profit maximizing price and quantity combination. For each quantity, ask yourself if Marginal Revenue exceeds Marginal Cost. If it does, then profits would be increased by producing that quantity. As you go down the table to higher quantities, stop…Suppose a monopolist faces a market demand that is the first two columns in the table below. Also, in the short run, assume that Total Fixed Cost equals $100 and the monopolist has Total Variable Cost according to the table. Find Total Revenue for each price and quantity combination, and then Marginal Revenue as price falls and quantity increases. Fill in the rest of the costs in the table and find profit at each price and quantity combination as the difference between Total Revenue and Total Cost.Suppose a monopolist faces a market demand that is the first two columns in the table below. Also, in the short run, assume that Total Fixed Cost equals $100 and the monopolist has Total Variable Cost according to the table. Find Total Revenue for each price and quantity combination, and then Marginal Revenue as price falls and quantity increases. Fill in the rest of the costs in the table and find profit at each price and quantity combination as the difference between Total Revenue and Total Cost. If profit is less than zero that indicates a loss. What is the maximum profit you found in this table? At what quantity and price combination is profit maximized for this monopolist?
- Suppose that the monopolist can produce with total cost: TC = 10Q. Assume that the monopolist sells its goods in two different markets separated by some distance. The demand curves in the first market and the second market are given by Q₁ = 120-4P₁ and Q₂ = 240 - 2P₂. Suppose that consumers can mail the product from cheaper location to a more expensive location at a mailing cost $50. What would be the monopolist profit? $5450 $6050 O $6450 $5050Suppose that the monopolist can produce with total cost: TC = 200. Assume that the monopolist sells its goods in two different markets separated by some distance. The demand curves in the first market and the second market are given by Q, = 240 - 4P, and Q2 = 360 - 2P2. Suppose that consumers can mail the product from cheaper location to a more expensive location at a mailing cost $24. What would be the monopolist profit? O $14896 O $11516 $13844 O $12672Suppose a monopolist operates in a market with two types of consumers (“high” and “low” types) and offers two types of goods (“high quality” and “low quality”). In general, if the monopolist wants to implement second-degree price discrimination (i.e. to sell the “high quality” good to the “high” type consumer and the “low quality” good to the “low” type consumer), they may have to set the price of the “high quality” good lower than the willingness-to-pay of the “high” type.(a) True. (b) False.
- Suppose that in the figure to the right, a monopolist knows that if it produces 10 units of output, its total revenues equal $60.00 and its total costs equal $42.70. If it were to reduce the price of its product to $5.80 per unit, the quantity demanded, and hence its output, would rise to 11 units per week. If the total costs of producing 11 units were equal to $48.70 per week, would the marginal revenue of producing the 11th unit be greater or less than the marginal cost of producing that unit? How would the firm's weekly economic profits be affected if the firm were to produce the 11th unit? The marginal revenue of producing the 11th unit would be greater than the marginal cost by $ per unit. (Enter your response round decimal places.) greater than equal to less than Price, Marginal Cost, Marginal Revenue ($ per unit) 0 MC 12 3 4 MR 5 6 7 8 9 10 11 12 13 14 15 Quantity (units per week) o MA monopolist faces two markets with demand functions given by q1 = 120 − p1 q2 = 120 − 2p2 The monopolist has no fixed costs of production, and the marginal cost of production is $10. Suppose the monopolist charges the price $80 per unit of output. What is the market demand at this price? Suppose that the monopolist charges different prices per unit of output in the two markets. How much output is produced? What are the prices? What is the monopolist’s profit?Consider a monopolist facing two consumers with the following two inverse demand functions: P=200-4Q1 and P=122- 6Q2. Assume that fixed costs are zero and that the marginal cost is equal to $8.a) Suppose the monopolist can differentiate between the two consumers. The monopolist decides to use a twoparttariff that permits both consumers to stay in the market. Solve for each consumer’s demand, fixed fee andmonopolist profits. b) Assume the monopolist cannot differentiate between the two consumers and hence cannot apply a two-parttariff. He decides to serve both consumers. Solve for the equilibrium aggregate demand and price in themarket, demand of each consumer and the monopolist profit.
- Suppose a monopolist could charge a different price to every customer based on how much he or she were willing and able to pay (versus charging the same price to all their customers). How would this affect the monopolist's profits? Why?The following graph gives the demand (D) curve for 5G LTE services in the fictional town of Streamship Springs. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local 5G LTE company, a natural monopolist. On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist. PRICE (Dollars per gigabyte of data) 20 18 16 14 12 10 4 2 0 0 1 2 4 True MR 3 5 7 QUANTITY (Gigabytes of data) O False 6 8 ATC MC 9 10 D + Monopoly Outcome Which of the following statements are true about this natural monopoly? Check all that apply. ? The 5G LTE company must own a scarce resource. The 5G LTE company is experiencing diseconomies of scale. The 5G LTE company is experiencing economies of scale. It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers. True or False: Without government…The following graph shows the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) for a monopolist. Suppose that this monopolist cannot price discriminate. Place the grey point (star symbol) on the graph to indicate the profit-maximizing price and quantity for this monopolist. If the monopolist is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if the monopolist is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. PRICE AND COST (Dolars) 100 8 8 R 90 70 329222 50 10 0 0 10 MC 20 30 MR 60 50 QUANTITY 40 ATC 79 00 D 90 100 . Monopoly Outcome Profit Loss