On the market of good Y there are 50 identical consumers. Each consumer has a demand function q=300-2pGood Y is produced by a monopolist, which is operating with a constant marginal cost of 50 and a fixed cost of 2000. Suppose the monopolist implements a two-part tariff pricing strategy. Calculate the maximum profit
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On the market of good Y there are 50 identical consumers. Each consumer has a
q=300-2p
Good Y is produced by a monopolist, which is operating with a constant marginal cost of 50 and a fixed cost of 2000.
Suppose the monopolist implements a two-part tariff pricing strategy. Calculate the maximum profit
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- On the market of good Y there are 70 identical consumers. Each consumer has a demand function q=300-2p Good Y is produced by a monopolist, which is operating with a constant marginal cost of 50 and a fixed cost of 2000. Suppose the monopolist implements a two-part tariff pricing strategy. Calculate the maximum profit obtainable.On the market of good Y there are 100 identical consumers. Each consumer has a demand function q=360-2p Good Y is produced by a monopolist, which is operating with a constant marginal cost of 50 and a fixed cost of 2000. Suppose the monopolist implements a two-part tariff pricing strategy. Calculate the maximum profit obtainable. Your Answer: AnswerA monopolist has discovered that the inverse demand function of a person with income Y for the monopolist’s product is P = 0.002Y-Q where P is the price, Y the income, and Q is the output. The monopolist can observe the incomes of its consumers and hence vary its price accordingly. The monopolist has a total cost function C(Q) = 100Q. A. Calculate the profit maximising price as a function of the consumer’s income Y carefully explaining all the steps in the derivation of the formula. B. A monopolist has a constant marginal cost of £2 per unit and no fixed costs. He faces two separate markets in the United States and in the UK. The goods sold in one market are never resold in the other. He sets one price P1 for the US market and another price P2 for the UK market (both measured in £). The demand in the United States is given by Q1=7,000-700P1 and the demand in the UK is given by Q2=1,200-200P1. Calculate the profit maximising output produced and price charged in each country by the…
- Consider a monopolistic market with demand function: P = 36 – 0.5Q The monopolist’s marginal cost (MC) and total cost (TC) function are: MC = $2 TC = 4 + 2Q How much total economic profit does the monopolist earn?Consider a monopolist facing two consumers with the following two inverse demand functions: P=200-4Q1 and P=122- 6Q2. Assume that fixed costs are zero and that the marginal cost is equal to $8.a) Suppose the monopolist can differentiate between the two consumers. The monopolist decides to use a twoparttariff that permits both consumers to stay in the market. Solve for each consumer’s demand, fixed fee andmonopolist profits. b) Assume the monopolist cannot differentiate between the two consumers and hence cannot apply a two-parttariff. He decides to serve both consumers. Solve for the equilibrium aggregate demand and price in themarket, demand of each consumer and the monopolist profit.Suppose a monopolist faces two groups of consumers. Group 1 has a demand given by P1=50−2Q1�1=50−2�1 and MR1=50−4Q1��1=50−4�1. Group 2 has a demand given by P2=40−Q2�2=40−�2 and MR2=40−2Q2��2=40−2�2. The monopolist faces a constant marginal cost equal to MC=10��=10.If the monopolist is allowed to engage in 3rd degree price discrimination, how many units of output will the monopolist sell? Question 12Answer a. 25 b. 10 c. 15 d. 20
- A monopolist has discovered that the inverse demand function of a person with income Y for the monopolist’s product is P = 0.002Y-Q where P is the price, Y the income, and Q is the output. The monopolist can observe the incomes of its consumers and hence vary its price accordingly. The monopolist has a total cost function C(Q) = 100Q. A monopolist has a constant marginal cost of £2 per unit and no fixed costs. He faces two separate markets in the United States and in the UK. The goods sold in one market are never resold in the other. He sets one price P1 for the US market and another price P2 for the UK market (both measured in £). The demand in the United States is given by Q1=7,000-700P1 and the demand in the UK is given by Q2=1,200-200P2. Calculate the profit maximising output produced and price charged in each country by the price-discriminating monopolist and comment in which country the price charged is higher and by how much. Explain if your answer above is as expected by…Assume that every consumer has the inverse demand function P = 20 – Q and that marginal cost is always zero. There are 10 consumers. The monopolist wants to maximize operating profits (that is, profits excluding fixed costs – consider only variable costs) by designing a two-part tariff. Calculate the two parts of the tariff, and calculate profits.A monopolist originally charges one price when producing output for consumers with a market demand function P(Q) = 86 – Q. Their total cost function is TC(Q) = 7,500 + 8Q, where MC is constant and equal to $8. Part (a): When the firm behaves as a single-price monopolist, what is the equilibrium market price and market output level? Suddenly, the firm discovers that there are actually two groups of consumers in the market. The first group demands the product according to P (q1) = 98 – 1, while the second group's willingness to pay can be summarized as P(q2) = 62 – 92, where q1 + q2 %3D Part (b): How much output is sold to each group and what price is charged to each group of consumers?
- A monopolist has a cost function given by C(y)=y2 and faces a demand curve given by P(y) = 120-y. a) What is the profit maximising level of output and the price that the monopolist will charge? Show your calculations. b) If you impose a lump sum tax of £100 on this monopolist, what will be the impact on output? Explain your calculations and the intuition behind your result. c) If you wanted to choose a price ceiling for this monopolist so as to maximise consumer plus producer surplus, what price ceiling should you choose? How much output will the monopolist produce at this price ceiling? Explain your calculations.A monopolist serves a market with five potential buyers, each of whom would buy at most one piece of the monopolist’s good. Anna would be willing to pay up to £80 for it, Bob up to £90, Chloe up to £100, Dave up to £110 and Elizabeth up to £120. The monopolist’s variable cost function is given in below table. a) Indicate in the table which price the monopolist would want to charge for each given quantity. b) Find the marginal revenue for each quantity. c) Find the monopolist’s profit maximising price under the assumption that he wants to produce anything at all. d) How large can the monopolist’s fixed costs be such that he still wants to start producing at all?