Suppose a market is characterized as having two different classes of buyers: Class One and Class...
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Suppose a market is characterized as having two different classes of buyers: Class One and Class Two. Furthermore suppose there is only one producer serving this market and this producer has fixed costs equal to $20 and Marginal Cost equal to 1 (MC=1). The two classes of buyers are described by the following demand curves: Class One: P = 10-Q Class Two: P = 20 - Q For each of the questions below show your work and reasoning. Suppose that the monopolist decides to produce the good and sell it for a single price. a. What is the market demand curve for this single price monopolist? b. What is the marginal revenue curve for this single price monopolist? c. What is the profit maximizing quantity for this single price monopolist to produce? d. What is the profit maximizing price for this single price monopolist? e. What is total revenue (TR) for this single price monopolist? f. What is total cost (TC) for this single price monopolist? g. What is the economic profit for this single price monopolist? h. What is the marginal revenue curve for Class One and what is the marginal revenue curve for Class Two? i. What is the profit maximizing quantity to sell to Class One? What price should this quantity be sold for? j. What is the profit maximizing quantity to sell to Class Two? What price should this quantity be fold for? k. Does the sum of the quantity sold to Class One plus the quantity sold to Class Two equal the profit maximizing amount you found in (c)? 1. Calculate the total revenue, total cost, and economic profit for Class One. Assume fixed cost is divided evenly between the two classes. m. Calculate the total revenue, total cost, and economic profit for Class Two. Assume fixed cost is divided evenly between the two classes. n. What do total profits equal for the monopolist when he practices third degree price discrimination? o. Is it worth price discriminating for this monopolist? Explain your answer. Suppose a market is characterized as having two different classes of buyers: Class One and Class Two. Furthermore suppose there is only one producer serving this market and this producer has fixed costs equal to $20 and Marginal Cost equal to 1 (MC=1). The two classes of buyers are described by the following demand curves: Class One: P = 10-Q Class Two: P = 20 - Q For each of the questions below show your work and reasoning. Suppose that the monopolist decides to produce the good and sell it for a single price. a. What is the market demand curve for this single price monopolist? b. What is the marginal revenue curve for this single price monopolist? c. What is the profit maximizing quantity for this single price monopolist to produce? d. What is the profit maximizing price for this single price monopolist? e. What is total revenue (TR) for this single price monopolist? f. What is total cost (TC) for this single price monopolist? g. What is the economic profit for this single price monopolist? h. What is the marginal revenue curve for Class One and what is the marginal revenue curve for Class Two? i. What is the profit maximizing quantity to sell to Class One? What price should this quantity be sold for? j. What is the profit maximizing quantity to sell to Class Two? What price should this quantity be fold for? k. Does the sum of the quantity sold to Class One plus the quantity sold to Class Two equal the profit maximizing amount you found in (c)? 1. Calculate the total revenue, total cost, and economic profit for Class One. Assume fixed cost is divided evenly between the two classes. m. Calculate the total revenue, total cost, and economic profit for Class Two. Assume fixed cost is divided evenly between the two classes. n. What do total profits equal for the monopolist when he practices third degree price discrimination? o. Is it worth price discriminating for this monopolist? Explain your answer.
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Related Book For
Financial Accounting
ISBN: 9781618533111
6th Edition
Authors: Michelle L. Hanlon, Robert P. Magee, Glenn M. Pfeiffer, Thomas R. Dyckman
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