Suppose the accompanying figure shows the demand curve, marginal revenue curve and marginal cost curve for a monopolist. Price ($/unit) 0 F MR G H Quantity (units/day) MC D When this monopolist maximizes its profit, consumer surplus equals the area:
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- Imagine that you ale managing a small firm and thinking about entering the market of a monopolist. The monopolist is currently charging a high price, and you have calculated that you can make a nice profit charging 10 less than the monopolist. Before you go ahead and challenge the monopolist, what possibility should you consider for how the monopolist might react?A movie production company is planning to make its new movie available online so that it can enjoy monopoly power. Each time the movie is downloaded the production company has to pay 4 taka to the internet service provider. Now it is deciding what price to charge for each download. The numbers below shows the demand schedule for the company, Price per download dollar - 10, 8, 6, 4, 2, 0. Quantity of downloads demands 0, 1, 3, 6, 10, 15. a) Calculate the total revenue and marginal revenue per download. b) To maximize profit what price should be charged and how many downloads would need to be sold?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 following table refers to information about a monopolist. The demand and total cost schedules for the monopolist are presented. Quantity 1 2 34 5 6 7 ܒܢ Calculate the marginal revenue from selling the 4th unit of output. Express your answer without units (e.g., if your answer is "$400", write "400" in the answer box). Type your answer... W 3 LU E a $ 4 R ddelddeelala www 000 6 Sº % Price $30 $28 $26 $24 $22 $20 $18 5 T 6 MacBook Pro Y & 7 A U * 00 8 1 Total cost $10 $20 $30 $40 $50 $60 $70 W 9 P O O T aMacmillan Learning Consider the following table, which provides price, revenue, and cost information for a monopolist. Quantity Price (P) Total Marginal Total cost Marginal (Q) revenue revenue (TC) (TR) (MR) 0 68 40 1 64 72 2 60 92 3 56 100 4 52 108 5 48 112 6 44 128 7 40 160 8 36 200 9 32 256 10 28 320 The profit-maximizing price for the monopolist is $ OOOO 40 44 36 48 cost (MC)Price 30 MC 23 20 15 ATC D 9 12 15 \MR Quantity d) If a price ceiling of $17.50 is imposed by the government on the monopolist, estimate the quantity that the monopolist will produce based on the graph. What happens to the deadweight loss and why? (Note: no need to compute for the DWL.)
- K The table shows a sample of prices and the quantity sold by a monopolist. What is the price elasticity of demand at a price of $97? A. 1 B. 1.04 OC. 0.89 OD. O Price 100 99 98 97 96 95 94 Quantity 95 96 97 98 99 100 101Consider the local telephone company, a natural monopoly. The following graph shows the demand curve for phone services, the company's marginal revenue curve (labeled MR), its marginal cost curve (labeled MC), and its average total cost curve (labeled AC). (Hint: Click a point on the graph to see its exact coordinates.) PRICE (Dollars per month) 160 140 120 100 80 60 40 20 0 0 1 MR 2 3 4 567 QUANTITY (Thousands of households per month) AC MC D 8 (?)The following table shows the quantity of a good sold by a monopolist at different prices. Quantity (units) 150 200 Price ($) 9. 8. 250 300 350 400 4 450 3 If the monopolist increases production from 250 to 400, what happens to total revenue (TR)? O TR decreases by $150 TR increases by $3 TR decreases by $3 TR increases by $150
- A monopolist knows that in order to expand the quantity of output it produces from 8 to 9 units it must lower the price of its output from £2 to £1. Calculate the quantity effect and the price effect. Use these results to calculate the monopolist’s marginal revenue of producing the 9th The marginal cost of producing the 9th unit is positive. Is it a good idea for the monopolist to produce the 9th unit?The diagram below shows a monopolist’s marginal cost scheduleand the demand curve. Find and depict the following items within the diagram and briefly explainhow you found them: a) The efficient (i.e., total surplus maximising) quantity. b) The monopolist’s profit maximising quantity. c) The monopolist’s profit maximising price. d) The monopolist’s optimal profit. e) The deadweight loss.The diagram shows the equilibrium of a profit-maximising monopolist. Cost/revenue (£) Which area represents the supernormal profits made by the monopolist? OABQ MC ABDH AC ABFG B JCFG Al АВСЈ G AR MR Quantity (Q) O o o O O