Only part (c) please, thank you! 3. Consider a market for a good with the following demand function:Q = 120-2pwhere is quantity demanded and p is the price. Suppose the cost of producing Qunits of the good be: C(Q) = Q²(a) If this market is perfectly competitive, what will be market price (pc) of the goodand total output, (Qc).(b) If instead of (a), the market is served by a monopolist (single firm), what will bethe monopolistic price (pm) and the quantity of the good produced, (Qm).(c) Calculate the resulting inefficiency of going from a perfectly compeitive to a mo-nopolistic market, as captured by the deadweight loss.

A monopoly is a market structure in which there is only one seller of a particular good or service.…

3. Consider a market for a good with the following demand function: Q = 120 - 2p where Qis quantity demanded and p is the price. Suppose the cost of producing Q units of the good be: C(Q) = Q² (a) If this market is perfectly competitive, what will be market price (pc) of the good and total output, (Qc). (b) If i J of (a) th

3. Consider a market for a good with the following demand function: Q = 120 - 2p where Qis quantity demanded and p is the price. Suppose the cost of producing Q units of the good be: C(Q) = Q² (a) If this market is perfectly competitive, what will be market price (pc) of the good and total output, (Qc). (b) If i J of (a) th

Economics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506725

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter23: Price-searcher Markets With Low Entry Barriers

Section: Chapter Questions

Problem 7CQ

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Imagine you are the owner of the Omaha Surfboard Company. You have a branch in Omaha and in Long Beach CA. After some market research you find the following surfboard demand for each market, Omaha Demand: Qo = 1000 – 10P Long Beach Demand: QL = 1000 – 5P Combined/Total Demand: Q = 2000 – 15P Your marginal cost is constant at $40. a. Find your price and quantity if you treated the market as a single entity with a single price. What is your profit? (Hint: find Marginal Revenue and set equal to MC) b. If you treat each market separately, what is P and Quantity in each market, and final profit?
1. A manufacturer estimates that D(p)=3000e0.05p units of a particular good will be sold at market price of p cedis per unit. Determine the market price that will result in marginal revenue of zero. 2. A manufacturer estimates that q = 800/30 – p units of a commodity are demanded when cedis per unit are charged. a. Express the price elasticity of demand as function of p . b. Calculate the price elasticity of demand when p=10. Interpret the result. c. Find the price at which the price elasticity of demand is unit-elastic. 3. An auto maker estimates that when q units of its saloon cars are sold in a day, its profit in millions of cedis is modelled as P(q) =100+25In 20 Find the 2 number of cars that should be produced and sold to maximise profit.
2. The Ice Cream Lovers Society decided to open up an ice cream stand during the summermonths. They calculated that it would cost them $0.80 to make a scoop of ice cream and$350 a month to operate the stand. They hired a research team who determined that theprice-demand function given in dollars isp x x ( ) = −8 0.02wherexis the number ofscoops sold.a. Find the revenue functionR x( )b. Find the value ofxthat produces the maximum revenue algebraically.c. Find the maximum revenue algebraically.d. Find the price per scoop of ice cream that produces the maximum revenuealgebraically.e. Find the cost functionC x( )that describes the monthly costs of operating the icecream stand.f. Find the break-even points to the nearest scoop algebraically usingR x( )andC x( ) .g. Find the profit functionP x( ).
Suppose High-Tech Software sells two products-a word-processing package and a spreadsheet package. Suppose that the business community values the word-processing package at $100 per unit and the spreadsheet package at $250 per unit while the university community values the word-processing package at $125 and the spreadsheet at $200. (Assume that the marginal cost of each unit is zero.) a. What are the profit-maximizing price that High-Tech should charge if they sell each product separately and what is the total price of the two goods? b. If High-Tech is able to engage in tying, what is the profit-maximizing price for the two products as a bundle? c. Should this be legal?
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?
Suppose that only one firm, Big Foot, sells footballs in the country and international trade of footballs including both exporting and importing is prohibited by government due to Big Foot’s successful lobby. The following equations indicates Big Foot’s market demand and total cost:• Demand: P = 5-0.5Q• Total Cost: TC = 1.5 + 0.5Q + 0.25 Q2where Q is quantity (in 1000) and P is the price measured in dollars. (i) Determine how many footballs Big Foot chooses to produce, the price it will set for its product and its expected profit. Illustrate your analysis with a propermarket diagram.(ii) Evaluate the size of deadweight loss cause by monopoly status of Big Foot. Suppose that the parliament passed a new law that not only allows everyone to sell footballs but also opens international trade of footballs. Suppose further that the market demand in the country remains the same while the price of football in the competitive global market is $3 including shipping and importation fee. Analyse…
O OO The above graph shows the market demand function for a product. Assume that the market is served by a perfectly-price-discriminating monopolist with a constant marginal cost of production equal to $4 (MC = $4) and no fixed cost (FC = 0). The deadweight loss equals: DWL - $72 DWL - $0 DWL- -$48 DWL - $84 DWL-$36 $30 $28 $26 $24 $22 $20 Question 23 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
The BCY Corporation provides accounting services to a wide variety of customers, most ofwhom have had a business association with BCY for more than five years.BCY's demand is: P = 24,000 – 20Q, and BCY's marginal cost of service is: MC = 40Q.a. If BCY charges a uniform price for a unit of accounting service, Q, what price must itcharge per unit, and how many units must it produce per time period in order to maximizeprofit? Calculate the consumer surplus.b. If BCY could enforce first-degree price discrimination, what would be the lowest pricethat it would charge and how many units would it produce per time period?c. With perfect price discrimination and ignoring any fixed cost, what is total profit andwhat is the amount of consumer surplus?
5. In a small college town there is only one movie theater. In a given month, if the theater is open, the owners have to pay a fixed amount of $6,000 for the films, ushers, etc., regardless of how many people come to the movies. For simplicity, assume that if the theater is closed, its costs are zero. The demand function for movie tickets in the town is characterized by ??= 45 −QT/60 a. Draw the market demand curve, the marginal revenue curve, and the marginal cost curve. Make sure to label the axes, curves, and intercepts. b. Find the profit-maximizing price and quantity of movie tickets, and indicate them on the graph above. How much would the theater make in profits?c. Suppose the local government implements a property tax, so that each month the theater now must pay a lump sum tax of $700. What will be the price and quantity of movie tickets under this tax?
2. Jack is the owner of the only local bar in a small town. He sells whiskey in one-ounce glasses. For simplicity, let's assume it doesn't cost Jack anything to run his business. There are two customers, Adam and Burt who are twin brothers. Adam's demand function is ya = 16 – 2p, and Burt's demand function is yg = 8- p (price is measured in dollars and quantity is measured %3D by ounces). Jack knows their demand functions, but the problem is that he cannot tell them apart since they look exactly the same to him. To increase his profits, Jack offers the following two options that his customers can choose from: (1) You can pay $T1 up front and drink as much as you want; or (2) Pay $T2 up front and the price per ounce of whiskey will be $p. 2.a If p = 4, what is the maximal T2 that Jack can charge so that Burt is willing to come to the bar? 2.b What is the maximal T, that Jack can charge so that Adam will choose the first pricing option?
For a monopoly, why is marginal revenue less than price? a) If a monopoly wishes to increase sales, it must raise the price to all customers. The impact of the price effect alone causes marginal revenue to be less than price. b) If a monopoly wishes to increase sales, it must lower the price to all customers. The impact of the quantity effect alone causes marginal revenue to be less than price. If a monopoly wishes to increase sales, it must lower the price to all customers. The marginal revenue will be less than the price because of the impact of the price effect working with the quantity effect. d) If a monopoly wishes to increase sales, it must raise the price to all customers. The impact of the price effect, working with the quantity effect, causes marginal revenue to be less than price. If a monopoly wishes to increase sales, it must lower the price to all customers. The impact of the price effect alone causes marginal revenue to be less than price.
What quantity will the above monopolist produce if it can first degree price discriminate? (Enter a number) How much consumer surplus do consumers get in the above graph if the monopolist first degree price discriminates? (Enter a number) If the monopolist first degree price discriminates, will the quantity produced by the monopolist be allocatively efficient? (Enter: YES or NO)