A movie theatre (a local monopolist) caters to students and other adults. The demand function for students is Qd = 2,700 – 150 P and the demand unction for other adults is Qd = 2,500 – 50 P . Marginal cost is 2 per ticket. Assume that the monopolist can discriminate. What price will the monopolist set for students? Pg = $ What price will the monopolist set for other adults? PA = $
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- A monopolist has a constant marginal cost of 12. Consumers' inverse demand is P = 32 - 4Q. The monopolist runs a persuasive advertising campaign that costs 26 and increases consumer demand to P = 37 - 4Q. (a) What is the gain (or loss) in the firms profits caused by the advertising campaign? b) When consumers' pre-advertising preferences are used to calculate welfare, what is the welfare gain (or loss) caused by the advertising campaign? Answer 2 Question 1 (c) When consumers' post-advertising preferences are used to calculate welfare, what is the welfare gain (or loss) caused by the advertising campaign? Answer 3 Question 1Suppose 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 $5050Consider a situation when the producer is a monopolist. Assume that the market demand is P=20-Q. The monopolistic marginal cost is equal to zero and the government impresses a unit tax on the producer equal to 10. How is the price level affected by this Tax?
- Suppose a monopolist sells a product to faculty members and students on the campus. If the firm sets a single price, the monopolist produces 5000 units and sell them at the price of $3 per unit. At this price, the price elasticity of demand for faculty member is -2.5. And the price elasticity of demand for students is -1.5. The monopolist is considering whether she should set different prices for the faculty members and students and asks for your advice. The monopolist is thinking about charging faculty members a 10% higher price. The quantity demanded by the faculty members would fall by %. The monopolist is thinking about charging students a 10% higher price. The quantity demanded by the students would fall by %. Who should the monopolist charge more? mention faculty and students and how muchA monopolist is deciding how to allocate output between two geographically separated markets (East Coast and Midwest). Demand and marginal revenue for the two markets are: P1=20−Q1 MR1=20−2Q1 P2=30−2Q2 MR2=30−4Q2 The monopolist's total cost is C=5+5(Q1+Q2). What are price, output, profits, marginal revenues, and deadweight loss if the monopolist can price discriminate? (round all answers to two decimal places) In market 1, the price is $12.50 and the quantity is 7.50 In market 2, the price is $17.50and the quantity is 6.25A monopolist is deciding how to allocate output between two geographically separated markets (East Coast and Midwest). Demand and marginal revenue for the two markets are: P1=20−Q1 MR1=20−2Q1 P2=30−2Q2 MR2=30−4Q2 The monopolist's total cost is C=5+5(Q1+Q2). What are price, output, profits, marginal revenues, and deadweight loss if the monopolist can price discriminate? (round all answers to two decimal places) In market 1, the price is $12.50 and the quantity is 7.50 In market 2, the price is $17.50and the quantity is 6.25 The monopolist's profit is $_____.
- A monopolist faces a demand curve p=150-q. Currently MC=AC=50. The monopolist is able to develop a cost-saving device which will lower their cost to MC=AC=30.a) How much will profits increase after the introduction of the new technology?b) If it costs the monopolist $3000 to develop this technology would they? If not what would be their maximum they would pay to develop this technology?c) If this industry were perfectly competitive, with the same cost, how much could a patent holder earn for this technology?Suppose 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 $12672A movie monopolist sells to college students and other adults. The demand function for students is Q = 840 - 100P, and the demand function for other adults is Q = 1,600 - 100P. Costs is c(Q) = 12 +0.005Q2m per ticket, where Q=Qs+ QA- Instructions: Round your answers to 2 decimal places. a. What prices will the monopolist set when she can discriminate? Pstudent = $ per ticket. Padult = $ Profit = $ per ticket. b. What if demand for adults increases to Q = 1,800 - 100P? Pstudent = $ Padult = $ Profit = $ per ticket. per ticket. c. When adult demand increases, the adult price: decreases. does not change. increases. d. When adult demand increases, the student price: decreases. increases. does not change.
- Which of the following best explains why the monopolist’s marginal revenue is less than the sales price?A) To sell more units, the monopolist must increase the price on all units sold.B) As the monopolist expands output, its total revenue always will decline.C) When the monopolist reduces price in order to sell more units, it must lower the price of units that could otherwise have been sold at a higher price.D) When a firm has a monopoly, consumers have no choice other than to pay the price set by the monopolist.Consider a monopolist that sells cable subscriptions. When the price is $10 a week, it can sell 175 subscriptions. When the price is $15 a week, it can sell 100 subscriptions. The monopolist has fixed costs of $200. The MC for the provision of the cable is $6 a week. If this monopolist must choose between selling 100 or 175 subscriptions, it will choose to sell units at a price of and earn economic profits equal to 175; $10; $700 100; $15; $700 175; $15; $900 100; $15; $900 none of the aboveSuppose 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…