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- The figure shows the market demand curve for penicillin, an antibiotic medicine. Initially, the market was supplied by perfectly competitive firms Later, the government granted the exclusive right to produce and sell penicillin to one firm. The figure also shows the marginal revenue curve (MR) of the firm once it begins to operate as a monopoly. The marginal cost is constant at $3, irrespective of the market structure What is the surplus enjoyed by the firm when it is the sole supplier of the medicine? OA. 590 OB. $180 OC. $30 OD. $60 Price/Cost (5) 10 1 10 20 30 40 MR Demand 50 60 70 80 90 Quantity (units)The market demand function is represented by P = 10,070 -2Q. In this market demand function, Pand Q represent the price level and output respectively. The total cost function of firm(s) in this market can be represented as TC = 50,000 + 0.3Q + 0.01Q2 in which the relevant marginal cost function will be MC = 0.3 + 0.02Q. What will be the net market surplus under a monopoly? The supply function is S = MC = 0.3 + 0.02Q.Consider a market with a common demand function given by Q = 100 - 2P, where Q represents quantity and P represents price. The total cost function for firms in this market is TC=1000+ 50². a) For a monopoly, calculate the profit-maximizing price, quantity, consumer surplus, producer surplus, and deadweight loss. b) Compare the monopoly equilibrium to the equilibrium in perfect competition. Calculate the price, quantity, consumer surplus, producer surplus, and deadweight loss under perfect competition. c) Use a single graph to illustrate both the monopoly and perfect competition equilibriums. 4
- Alice is the monopoly producer for cosmetics in Wonderland. Market demand for cosmetics is given by p = 500 – 4Q and Alice's costs of production are C(q) = 169. Please calculate the monopoly price, quantity and profits. What would be the fair market price in perfect competition? Also calculate the welfare loss which occurs due to the monopoly.You have been granted a monopoly in the avocado market. The market demand for avocados is Q = 2000 – 2P. Your cost structure is such that your total costs are TC = 1000+ 400Q. (limit: whatever needed) What is your profit maximizing price and quantity? Explain this in words and show it graphically. What are the profit, producer surplus and consumer surplus? The government is thinking about breaking your monopoly into ten identical firms and giving ownership to 10 random people. Correspondingly, each firm would have a fixed cost of $1000 and a marginal production cost of $400 per unit. In this perfectly competitive environment, what would be the equilibrium price and quantity? Explain this in words and show it graphically. What are the profit per firm, producer surplus and consumer surplus that correspond to your answer to part d)? How much would you be willing to pay to keep the government from taking your monopoly away? Explain.A firm sells some output in a perfectly competitive market, where the price is $60 per unit, and some on a market in which it has a monopoly, with a demand function p2= 100 - q2, where q2 is output in the monopoly market. Its total-cost function is C= (q1+q2)^2, where q1 is output in the competitive market. Find the profit maximizing outputs in the two markets and discuss the nature of the equilibrium. Suppose now that the price in the competitive market falls to $10. Find the new profit-maximizing solution, and discuss how it compares with the original.
- Suppose that Intel has a monopoly in the market for computer chips. In order to produce X computer chips, it costs Intel C(X) = 2X2. (i) Find the marginal cost of producing a computer chip for Intel. ii) The demand for computer chips is X =12 − 0.25P. Find the level of output that maximizes Intel’s profits. What price is Intel charging?Assume that one of the hot dog vendors successfully lobbies the city council to obtain the exclusive right to sell hot dogs within the city limits. This firm buys up all the rest of the hot dog vendors in the city and operates as a monopoly. Assume that this change doesn't affect demand and that the new monopoly's marginal cost curve corresponds exactly to the supply curve on the previous graph. Under this assumption, the following graph shows the demand (D), marginal revenue (MR), and marginal cost (MC) curves for the monopoly firm. Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and quantity of a monopolist. PRICE (Dollars per hot dog) 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0 0 45 Monopoly MC MR 90 135 180 225 270 315 QUANTITY (Hot dogs) D 360 405 450 Monopoly Outcome Deadweight Loss ?Consider the welfare effects when the industry operates under a competitive market versus a monopoly. On the monopoly graph, use the black points (plus symbol) to shade the area that represents the loss of welfare, or deadweight loss, caused by a monopoly. That is, show the area that was formerly part of total surplus and now does not accrue to anybody. Deadweight loss occurs when a monopoly controls a market because the resulting equilibrium is different from the competitive outcome, which is efficient. In the following table, enter the price and quantity that would arise in a competitive market; then enter the profit-maximizing price and quantity that would be chosen if a monopolist controlled this market. Market Structure Price Quantity (Dollars) (Hot dogs) Competitive Monopoly Given the summary table of the two different market structures, you can infer that, in general, the price is higher under a_______________, and the…
- Consider a monopoly that faces the demand curve P = 20 − Q, and has the marginal cost curve MC = 2. a) Use the demand curve to find the equation of the marginal revenue curve. b) Find the profit-maximizing price and quantity for this monopoly if the monopoly uses uniform pricing. What is the producer surplus? c) Now, suppose the monopoly wants to increase profits using block pricing. The total cost the monopoly incurs is T C = 2Q. Find the optimal quantities, Q1 and Q2, and their corresponding optimal prices, P1 and P2 that maximize profits using a two-block pricing scheme. What is the new producer surplus? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Waterker is the only company selling the gorgeous Perspective fountain pens. The cost to produce q pens is C(q) = 0.5q2 + 10. (In the long run, all costs are avoidable.) The demand for these incredible pens is given by p(g) = 132 - q/10. How much deadweight loss is generated by Waterker's monopoly on the Perspective? Enter a numerical value below. You may round to the second decimal if necessary.If a monopoly faces an inverse demand curve of p=450-Q, has a constant marginal and average cost of $30, and can perfectly price discriminate, what is its profit? What are the consumer surplus, welfare, and deadweight loss? How would these results change if the firm were a single-price monopoly? Profit from perfect price discrimination () is $88200. (Enter your response as a whole number.) Corresponding consumer surplus is (enter your response as whole numbers): welfare is and deadweight loss is Profit from single-price profit-maximization is = $44100. (Enter your response as a whole number.) Corresponding consumer surplus is (enter your response as whole numbers): welfare is and deadweight loss is CS = $0 W = $ 88200 DWL = $0. CS = $ 22050 W = $ 66150 DWL = $ 22050
