Understanding Monopoly: Profit Maximization and Market Effects
School
Nguyen Trai University**We aren't endorsed by this school
Course
ECONOMICS 1102
Subject
Economics
Date
Dec 12, 2024
Pages
4
Uploaded by SuperHumanRhinoceros1100
Econ 1102-Temple University Principles of Microeconomics ©Prof. Shreyasee Das Chapter 15 Monopoly Question 1 Suppose that a monopolist produces good A. The profit-maximizing quantity is 40 units, the profit-maximizing price is $160, and the marginal cost of the 40th unit is $120. If good A were produced in a perfectly competitive market, the equilibrium quantity would be 50, and the equilibrium price would be $150. What is the value of the deadweight loss created by the monopolist? Question 2 Which of the following panels represents a perfectly competitive firm’s demand curve, and monopolist’s demand curve? DPanel AQuantityPriceDPanel BQuantityPriceDPanel CQuantityPriceDPanel DQuantityPrice
Econ 1102-Temple University Principles of Microeconomics ©Prof. Shreyasee Das Question 3 Table 15-1 Quantity Price Total Revenue Average Revenue Marginal Revenue 1 $35 $35 2 $64 $32 $29 3 $29 4 $17 5 $23 $11 6 $120 7 $17 $-1 8 $-7 9 $99 $11 $-13 10 $80 $8 Refer to Table 15-1. Assume this monopolist's marginal cost is constant at $12. What quantity of output (Q) will it produce and what price (P) will it charge? Question 4 What is the socially efficient price and quantity? DMRMCABDCGFQuantityPrice
Econ 1102-Temple University Principles of Microeconomics ©Prof. Shreyasee Das Question 5 What is profit for this monopolist? Question 6 Calculate the Price Effect and Quantity Effect when Price decreases from $23 to $20 Quantity Price Total Revenue Average Revenue Marginal Revenue 1 $35 $35 2 $64 $32 $29 3 $29 4 $17 5 $23 $11 6 $20 $120 7 $17 $-1 8 $-7 9 $99 $11 $-13 10 $80 $8 Curve BCurve ACurve DCurve CQ3P4P2Q4P3Q1P0P1Q2P5QuantityPrice
Econ 1102-Temple University Principles of Microeconomics ©Prof. Shreyasee Das Question 7 Refer to the graph below and answer the questions below Single-Price Monopoly A.If the monopoly firm is not allowed to price discriminate, what is consumer surplus equal to? B.If the monopoly firm is not allowed to price discriminate, what is profit equal to? C.If the monopoly firm is not allowed to price discriminate, what is deadweight loss equal to? Perfect Price Discrimination: A.If the monopoly firm perfectly price discriminates, what is consumer surplus equal to? B.If the monopoly firm perfectly price discriminates, what is profit equal to? C.If the monopoly firm perfectly price discriminates, what is deadweight loss equal to? MC=ATCDemandMR50100 150 200 250 300 350 400 450 500 550 600Quantity5101520253035404550Price