Question: Problem 2 (25 marks) A monopolist faces a demand curve Q = 50 - - and has a marginal cost MC - 10 + 40.

Problem 2 (25 marks) A monopolist faces a demand curve Q = 50 - - and has a marginal cost MC - 10 + 40. Suppose there is no fixed cost. Use the given equations to answer the following questions. 1) Calculate the profit or loss that the monopolist achieves if its objective is to maximize profits? (3 marks) 2) Calculate the price level that maximizes the monopolist's total revenue? (3 marks) 3) Calculate the Lerner's index of monopoly power? (3 marks) 4) Calculate the price elasticity of demand that this monopolist faces at the profit maximizing equilibrium? (3 marks) 5) Calculate the welfare loss that results from this monopolist? (5 marks) 6) Graph your results (3 marks) 7) If this monopolist used a first-degree price discrimination, how much is the consumer surplus and the deadweight loss in this case

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

PART A ? Questions 1 ? 7 Consider a market where demand is D: P = 30 ? Q and supply is S: P = 0.5Q. Equilibrium quantity Qe is 17 18 19 20 Equilibrium is price Pe $10 $11 $12 $13 Consumer surplus CS...

Consider this demand curve. A line graph depicting a demand curve and marginal cost. Access image details Demand curve and marginal cost line graph. The x-axis is labeled quantity and runs from 0 to...

Demand curve and marginal cost line graph. The x-axis is labeled quantity and runs from 0 to 45 in increments of 5. The y-axis is labeled price and runs from $0 to $90 in increments of $10. One line...

1. A monopolist's cost curve is given by def) = 25 + 4q and she faces the demand curve q = 20 p. a. What output will the monopolist sell, and at what price? b. What output level, if produced, would...

May I know how do we get to the answer of question 13 E mp 3X1+ - Google X14 X DeepL Translate: The world X LATE Quiz 11 (Monopoly) / / X PowerPoint FR# x Surfshark : FengEF x Email -...

Question 2(1 point) If a monopolist sets her output such that marginal revenue, marginal cost and average total cost are equal, economic profit must be: Question 2 options: Zero Negative Positive...

i have some problems with all questions. With a budget of Q Search in Document Home Insert Design Layout References Mailings Review View Table Design Layout + Share ~ Calibri (Body) 14 AaBbCcDdEe...

Question 5 (1 point) At the farmer's market in Irvine, California, the price of avocados is set at $3 each. At that price, 120 avocados are supplied but only 100 are purchased. Represent this on a...

There are only two risky assets (stocks) A and B in the market. Mean 20% B 10% The returns on the two assets have zero correlation. A Standard Deviation 10% 5% A. Assume that there is no risk-free...

Task 2: (Basic operations) 20 marks 1. Constructors:(3) a. MyList () Pre-condition: None. Post-condition: This is the default constructor of MyList class. This constructor creates an empty list.

Q 8 The following costs are associated with three peeling machines being considered for use in a canning plant for a 1 0 - year - long project. If the canning company uses an interest rate of \ ( 1 0...

Explain what Bundled-Payments and Diagnosis Related Group (DRG)-based reimbursement represents per ACA.

3. Imagine three people you know relatively well. Consider which of the five positions they often use in the conversations they engage in with other people.

4. Select a person you want to model. Choose what you want to model in this person, such as relationship skills. a. Observe what he does and how he does this in relationships with others. b. Try to...

2. Start with a person you want to model. a. Use the five positions to investigate how this person positions himself in relation to others, i.e. how he uses the five positions in his interaction with...