QUESTION 3 Suppose that a monopolist whose marginal cost curve is MC(Q) = Q faces the demand curve P = 10-2Q. The total surplus (under monopoly profit maximization), also called the "monopoly market surplus," equals O O $12 O $14 O $10 $16
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- If the monopolist shown in the following figure could practice first-degree price discrimination, the consumer surplus would be: Price (dollars) 50 40 30 20 10 0 O $450.00 $900.00 $0.00 $225.00 O $1,200.00 30 50 60 MR 100 MC QuantityCost & Figure 15 Revenue $10 per unit MC $9 $8 АТС $7 $6 $5 $4 $3 $2 $1 MR 2 3 4 7 8 10 Quantity (in thousands) Refer to the above Figure 15 which shows cost curves, a marginal revenue (MR) curve and a demand curve faced by a monopolist. If this monopolist is profit maximizing and does not price discriminate, it will produce ( Select ] v units of output and charge a price of [ Select ] per unit. Given its cost curves, we can tell that this monopolist is currently earning [ Select ] economic profit. According to the classical welfare economics, the socially efficient quantity to be produced in this market would be [ Select ] units of output and a socially efficient price would be [Select ] per unit.Figure: Monopoly Profits 2 P. 18 16 14 12 10 6. MC = AC MR 0 20 40 60 80 100 120 140 160 180 Q What is the consumer surplus at the monopolist profit-maximizing output and price? O $245 $630 O $315 $280 4. 2)
- A monopolist faces the demand curve illustrated below. 12 9 -1 -2 12 13 11 15 15 1 1s 19 20 21 22 23 24 Suppose the monopolist faces a marginal cost of $5, and that there are no fixed costs. Thus, the marginal cost is equal to the average total cost in this case. Given this, what is the monopolist's profit maximizing price if it is not able to price discriminate O $5 O $8.33 O $2 O $10 $7.50 N O087654321A monopolist is chooses their price (and the associated quantity implied by their demand curve) such that the price elasticity demand could be either -0.5 or -1.2. Which of the following statements are true: O -0.5 could be profit maximising, but -1.2 could not be profit maximising O Neither price-elasticities of demand could be profit maximising O Both price elasticies of demand could be profit maximising O -1.2 could be profit maximising, but -0.5 could not be profit maximisingOutput D 1 2 3 4 5 Maple Choice O Refer to the demand and cost data for a pure monopolist given in the table if the monopolist perfectly price-descriminated and sold each unt of the product at the maximum price the buyer of that unit would be willing t pay, and if the monopolist maximized profits, then the total profit receved would be O 5820 $550 $1,500 Price $420 $900 380 340 300 260 220 Total Cost $250 260 290 350 500 600
- A single-price monopolist is currently producing at an output level where marginal revenue is $14, marginal cost is $16, AVC=$13, and ATC= $15. It is assumed that the monopolist, as usual, chooses its price on the demand curve. To maximize profit or minimize losses in the short run, this monopolist should O A. decrease the price and increase the level of output. O B. increase the price and the level of output. O C. leave the market. O D. decrease the price and the level of output. O E. increase the price and decrease the level of output.The monopolist has constant marginal and average cost AC-MC=70 and faces the market demand P120-Q. Suppose the monopolist can perfectly price discriminate by setting a two-part tariff: that is, the monopolist charges the consumer a fixed fee Fand a per unit price p. What are the optimal values of Fand p that the monopolist sets? O F-$2500, p-$70 O F-$3500, p-$70 O F-$2375, p-$95 O F-$1250, p-$70 O F-$2975, p-$85Each consumer has the following demand for annual visits to Planet Fitness: Q = 100 - P, where Q is the number of visits to Planet Fitness per year and P is the price per visit. In western Maryland, Planet Fitness has a monopoly on the gym market in the area. If the marginal cost of serving each customer is $10 per visit, what is the optimal two-part tariff that Planet Fitness could charge each customer? O Annual fee = $4,050; P = $10 for each visit O Annual fee = $5,000; P = $10 for each visit. Annual fee = $4,050; P = $0 for each visit. O Annual fee $5,000; P = $0 for each visit.
- 3. Suppose the inverse demand function is linear: p(q) = 24-q The monopolist's cost %3D function is c(g)-0.5g*. Assume the monopolist must charge a uniform price. (a) Find the optimum monopoly price and quantity. Also calculate the deadweight loss. (b) Suppose the governmet can levy a lump-sum tax T (i.e., a fixed amount indepen- dent of produetion) and an excise tax t per unit of production on the monopolist. These taxes can be negative, in which case they are subsidies. The proceeds of these taxes can be transferred to consumers. The monopolist is always free to quit the market, in which case she does not have to pay any taxes. The government wants to maximize the ensumer welfare: Pind the optimum vaues of t andConsider a monopolist which sells output in two markets, the home market and the foreign market. The menopolist faces a linear demand curve of P - 20 - Qi in the home market and Py - 40- 20, in the foreign market The monopolists total cost is C(q)-1500-q What prices the monopolist charges in the home and the foreign market respectively? O$11, $21 Os12. S16. O $6, S18 O $18, $28. none of the aboveAn industry with only one producer has a demand curve of P = 90-Q, with price in dollars and quantity in thousands. The monopolist's marginal cost curve is MC = 30 + 2Q. What is the deadweight loss of monopoly in this industry? O $100,000 O $37,500 O $72,667 $50,000
