None A monopoly sells music CDs. It has constant marginal and average costs of $20. It faces two groups of potential customers: honest and dishonest people.The dishonest and the honest consumers' demand functions are the same:p=130-1Q.a. If it is not possible for the dishonest customers to pirate (steal) the music, what are the monopoly's profit-maximizing price and quantity? What is the deadweight loss?(round your answers to two decimal places)The equilibrium price is $ and the equilibrium quantity isunits.The deadweight loss (DWL) is $.

Detailed explanation:This scenario analyzes a monopoly selling music CDs in a situation where…

Answered: A monopoly sells music CDs. It has…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.6P

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3. A monopoly sells its goods in the U.S. and Japanese markets. The American inverse demand function is: PA = 1403QA and the Japanese inverse demand function is: PJ = 100-2QJ Assume that the firm's marginal cost of production is m = = 50 in both countries. (a) If the firm can price discriminate (prevent resale between markets), what price will it charge, how much will it produce, and how much profit will it earn in each market. (b) Resolve the problem assuming that the firm cannot price discriminate (e.g., Pa = PJ = p). (c) Compare your results from (a) and (b). How does price discrimination impact the firms' profits? How does it impact consumers in the American and Japanese markets?
10. A monopoly with the total cost function TC=5Q is facing the demand function Q = 1250-50P. How much can the monopoly increase its profits if it moves from charging a single monopoly price to utilizing a two-part tariff?
What are the four most important ways a firm becomes a monopoly? Will a monopoly that maximizes profit also be maximizing revenue? Will it be maximizing output? Explain. Assume the graph below represents the market for a monopolist. What quantity will the monopolist produce, and what price will she charge? What will her total revenue, costs, and profit be at this level of production? What will the deadweight loss for society be at this level of production? (Assume the MC curve is a straight line between the relevant points for this calculation.) 3. U.S. antitrust laws are designed to prohibit monopolization and encourage competition. Why, then, does the government erect barriers to entry and create monopoly power by granting firms patents?
Consider the relationship between monopoly pricing and the price elasticity of demand. If demand is inelastic and a monopolist raises its price, total revenue would (DECREASE OR INCREASE) and total cost would(DECREASE OR INCREASE) . Therefore, a monopolist will (SOMETIMES, ALWAYS, NEVER) produce a quantity at which the demand curve is inelastic. Use the purple segment (diamond symbols) to indicate the portion of the demand curve that is inelastic. (Hint: The answer is related to the marginal-revenue (MR) curve.) Then use the black point (plus symbol) to show the quantity and price that maximizes total revenue (TR).
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
6. A monopoly produces two goods with the following demand functions: 100-2p1 +P2 92 = 120 + 3p1 - 5p2 (a) Write down the expression of the profit function of the firm if its total costs (TC) are giver TC = 50 + 10q1 + 2042 %3D where q and 2 are the outputs of the two goods, and pi and p2 are the prices of the good 91 (b) Use Cramer's rule to find the values of pi and p2 which maximize the monopoly's profit.
Consider the relationship between monopoly pricing and the price elasticity of demand. If demand is inelastic and a monopolist raises its price, quantity would fall by a percentage than the rise in price, causing profit to Therefore, a monopolist will produce a quantity at which the demand curve is elastic. Use the purple segment (diamond symbols) to indicate the portion of the demand curve that is inelastic. (Hint: The answer is related to the marginal- revenue (MR) curve.) Then use the black point (plus symbol) to show the quantity and price that maximizes total revenue (TR). (? 10 Demand Inelastic Demand 6 5 Max TR 3 2 1 -1 -2 Marginal Revenue -3 -4 1 2 3 4 5 7 8 9 10 Quantity
If a monopoly faces an inverse demand curve of p=210-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 (x) is $ 16200. (Enter your response as a whole number.) Corresponding consumer surplus is (enter your response as whole numbers): welfare is and deadweight loss is CS=$0, W=$ 16200. DWL=$0. Profit from single-price profit-maximization is = $8100 (Enter your response as a whole number.) Corresponding consumer surplus is (enter your response as whole numbers): welfare is and deadweight loss is CS = $. W=$. DWL=$
If a monopoly faces an inverse demand curve of p=330-Q, has a constant marginal and average cost of $90, 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 $ 28800. (Enter your response as a whole number.) Corresponding consumer surplus is (enter your response as whole numbers): welfare is and deadweight loss is CS=$ W = $ DWL = $ A
Monopoly: Work It Out Earlier we mentioned the special case of a monopoly where MC = 0. Let’s find the firm’s best choice when more goods can be produced at no extra cost. Since so much e‑commerce is close to this model—where the fixed cost of inventing the product and satisfying government regulators is the only cost that matters—the MC = 0 case will be more important in the future than it was in the past. For each demand curve, calculate the profit-maximizing level of output and price as well as the monopolist's profit. a. ?=200−?P=200−Q, fixed cost = 1,000. Profit‑maximizing output Q = Profit‑maximizing price P = $ Monopolist's profit: $ b. ?=4,000−?P=4,000−Q, fixed cost = 900,000 (Driving the point home from part a) Profit‑maximizing output Q = Profit‑maximizing price P = $ Monopolist's profit: $ c. ?=120−12?P=120−12Q, fixed cost = 1,000…
Question 27 Consider a monopoly market in which the market demand curve is given by P = 240 – 2Q, the marginal revenue curve is MR = 240 – 4Q, the marginal cost curve is MC = 2Q, and there are zero fixed costs. Suppose the government intervenes and turns the market into a competitive market, and all the firms in the market have the same marginal cost curve as the monopolist, MC = 2Q, and zero fixed costs. How much is the resulting gain in total surplus? 300 800 400 600
Consider the relationship between monopoly pricing and the price elasticity of demand. If demand is inelastic and a monopolist raises its price, quantity would fall by a ▼. Therefore, a monopolist will Use the purple segment (diamond symbols) to indicate the portion of the demand curve that is inelastic. (Hint: The answer is related to the marginal- revenue (MR) curve.) Then use the black point (plus symbol) to show the quantity and price that maximizes total revenue (TR). Price 10 9 CO 7 6 S E 2 0 -2 Demand Search percentage than the rise in price, causing profit to produce a quantity at which the demand curve is elastic. Marginal Revenue 86 Inelastic Demand e + Max TR C ? (CC Speaker/Headph A

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