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- Some years ago. two intercity bus companies, Greyhound Lines, Inc. and Trailways Transportation System, wanted to merge. One possible definition of the market for this case was the market for intercity bus service. Another possible definition was the market for intercity transportation, including personal cars, car rentals, passenger trains, and commuter air flights.' Which definition do you think the bus companies preferred, and why?Imagine a monopolist could charge a different price to every customer based on how much he or she were willing to pay. How would this affect monopoly profits?Prior to 1995, Thad only one beer producer a government-owned monopoly called Tawan Bear Suppose that while it was a monopoly. The company was un in a way to maximize peolt for the government. That is assume that it behaved like a private, pro maximizing monopolist Assuming demand and cost conditions are given on the following diagram, at what we would Taiwan Bear have targeted output and what price would it have charged Now suppose that while it was a monopoly Tewan Beer decided to compete in the highly competitive American market Assume further than maintained import barriers so that American producers could not sat in Taiwan but that they were not immediately reciprocated Assung Tan Beer could set all that it could produce in the American market at a price P Pund the wing given Q nalou oldi Tang The new price in Taiwan after the The output sold in the US is given by 0-0, Ta progiven by the re A P OF P OP by O market openss Price ($) P₂ MR Quantity MC AC PU.S. Drin
- Figure: A Profit-Matimizing Monopoly Firm Price, marginal revenue, marginal cost, average total cost $35 ATC 29 26 160 220 250 300 Quantity of output per week) (Pipure. A Protin-Maximining Monopoly Finn) The profin-miing fiem in this fipre will prodace A) 160 B) 220 C) 250 D) 300 its of ourput per week (Pigure: A Profit-Masimining Monopoly Finm) This profit-matimining monopoly fimi's cost per unit at its profintinizing quantity is A) 38. B) $15. C) $16. D) $18. (Pigure: A Profie-Macimining Monopoly Fim) This profit-maximizing monopoly firmts price per unit is A) $20. B) $26 C) $29. D) $35. (Figure. A Profit-Marimining Monopoly Fim) This profn-matimizing monopoly firm's profit per unit is: A) $5. B) $13. C) $14. D) $20.Suppose that global dem and for the rabies shots is gi ven by: Q = 36 – 6 * P where Q is the dem and in billions of units. Suppo se further that the firm DOGGO holds a pa tent on the only effective rabies shot. DOGGO’s total cost function (in billi ons of dollars) for produ cing Q shot doses is: C = 5 + 3 * Q Assuming that the patent grants DOGGO a monopoly on the global rabies shots market: How many doses will DOGGO choose to produce? At what price will DOGGO sell its shots?Problem 3 uppose an airline has monopoly over a certain route. The estimated price elasticity of demand for business travelers is E-12, while the price elasticity of demand for leisure travelers is Ey-24. The airline wants to set the prices separately for business and vacation travelers. Economy Firat Class Only i the marginal cost of transporting each passenger is the same, und the airline is able to separate the two groups perfoctly, what is the optimal surcharge (in ) on business travelers? Oor example. fleiture travelers pay 100, and business ravelers pay 200, then the surcharge is 100%) Anvwer b) Suppose that in order to separste business travelen, the airline must offer them slightly better conditions on board (for enample, serve them a meal). As a resul, the marginal cost of flying a basiness traveler is 30% higher than for a leivare traveler. What is the optimal surcharge (in ) on business fravelers in this case? Awwer Now suppose the airline introdaces a Basi Economy fare,…
- Assume that the competition between Boeing and Airbus can be characterized by the following mnatrix Aórbus Produce Qut] Produce -15/ – 5 90/0 Boeing Quit 0/140 0/0 where the first number in each cell denotes the payoff that Boeing receives and the second nunber is the payoff that Airbus receives. Assume that Boeing has a first mover advantage. Then a subsidy of 10 provided to Airbus by the European government will change nothing will increase European welfare will negatively affect European welfare result in both firms leaving the marketMany schemes for price discrintination involve somecosL For example, discount coupons take up the timeand resources of both the buyer and the seller. Thisquestion considers the implications of costly pricediscrimination. To keep things simple, let's assumethat our monopolist's production costs arc simplyproportional to output so that average total cost andmarginal cost arc constant and equal to each other.CHAPTER 15 MONOPOLY 317a. Draw the cost., demand, and marginal-revenuecurves for the monopolist. Show the pricethe monopolist would charge without pricediscrimination.b. ln your diagram, mark the area equal to the mernopolist's prolit and call it X. Mark the area equalto consumer surplus and call it Y. Mark the areaequal to the deadweight loss and call it Z.c. Now suppose that the monopolist can perfectlyprice discriminate. What is the monopolist'sprofit? (Give your answer in terms of X, Y, and Z.)d. What is the change in the monopolist's prolit fromprice discrimination? What is the…The diagram bow depts the demand curve (D), the marginal revenue curve (MRO), the marginal cost curve (MC), the average variable cost con (C) and the (ATC) for a monopoly producing a good named ALPHA2 Based upon the information shown on the graphs, determine the maximum profits of the moneonly knowing that the seat value of Xie 35 247 15 Price 10 54 25 204 40 60 sst 50+ 45 30 x+ MC ATC AVC MR 50 60 70 80 90 100 110 120 130 140 150 160 170
- . When Chinese automakers began exporting cars, rather thanfocusing on developed nations in the West, they shippedautos to emerging markets in countries such as Algeria, Russia,Chile, and South Africa. In these markets, even used vehiclesfrom multinational manufacturers are relatively scarce—andrelatively expensive. The Chinese automakers, who prioritizelow cost rather than design or even safety, applied a penetration-pricing strategy. A woman in Santiago, Chile, who boughta new Chery S21 explained, “The price factor is fairly decisive.I paid $5,500 new and full. Toyota with similar features costsaround $12,000.” Why do you think Chinese automakerschose that pricing strategy? Do you think it was successful?As Chinese regulators pressure these manufacturers to maketheir cars safer, do you think they will be able to keep theirprices low compared with those of the international automakers? Why or why not?26enter roctor "se urce n When negative externalities are present in a market 3 O private costs will be greater than social costs. O social costs will be greater than private costs. O only government regulation will solve the problem. O the market will not be able to reach any equilibrium. Question 3 In a monopolistically competitive industry, firms set price O equal to marginal cost since each firm is a price taker. O below marginal cost since each firm is a price taker. O above marginal cost since each firm is a price setter. O always a fraction of marginal cost since each firm is a price setter. C $ O 4 % BABAA 5 M Oll 6 & O 7 8 O 9 2 pts ✓ 0The graph below represents sales per week of ABC Inc. Ltd, a monopoly multinationalenterprise that supplies Hi-tech components. Use the graph to answer the questionsthat follow i. State the elasticity of the monopoly firm demand curve. ii. Considering the figure, examine the benefits of the characteristics of themonopoly demand curve to ABC Inc. Ltd. iii. Suppose the demand and cost curves result in ABC Inc. Ltd earning aneconomic profit. Do you think ABC Inc. Ltd firm will earn profit in the long run? Explain your answer. Assume all factors constant. iv. Examine the effects of ABC Inc. Ltd on consumers.