The Seahaven Vending Machine Company is a uniform-pricing monopolist with cost function C(y) = 12y and...

 

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The Seahaven Vending Machine Company is a uniform-pricing monopolist with cost function C(y) = 12y and the demand curve for the company's product is P(y) = 100 - 4y (a) Formulate an expression for the Seahaven Vending Machine Company's marginal rev- enue curve, MR(y), and marginal cost curve, MC(y). (b) Find the monopolist's optimal quantity and price in this market and what the optimal quantity and price would be if this market were perfectly competitive. (c) Draw a diagram (with y on the horizontal axis) labeling the perfectly competitive out- come as A, and the monopolist outcome as B. Include the marginal cost, marginal revenue, and demand curves in your diagram and shade the area that represents the deadweight loss from monopoly. (d) Calculate the consumer surplus in this market under the monopoly, what the con- sumer surplus would be under perfect competition, and what the deadweight loss from monopoly is. (e) Suppose the Seahaven Vending Machine Company could engage in first-degree price discrimination. What would the consumer surplus and deadweight loss from monopoly be with this type of price discrimination in place? The Seahaven Vending Machine Company is a uniform-pricing monopolist with cost function C(y) = 12y and the demand curve for the company's product is P(y) = 100 - 4y (a) Formulate an expression for the Seahaven Vending Machine Company's marginal rev- enue curve, MR(y), and marginal cost curve, MC(y). (b) Find the monopolist's optimal quantity and price in this market and what the optimal quantity and price would be if this market were perfectly competitive. (c) Draw a diagram (with y on the horizontal axis) labeling the perfectly competitive out- come as A, and the monopolist outcome as B. Include the marginal cost, marginal revenue, and demand curves in your diagram and shade the area that represents the deadweight loss from monopoly. (d) Calculate the consumer surplus in this market under the monopoly, what the con- sumer surplus would be under perfect competition, and what the deadweight loss from monopoly is. (e) Suppose the Seahaven Vending Machine Company could engage in first-degree price discrimination. What would the consumer surplus and deadweight loss from monopoly be with this type of price discrimination in place?

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Lets go through each part of the question step by step a Formulate an expression for the Seahaven Vending Machine Companys marginal revenue MRy and marginal cost curve MCy The marginal cost MC is the ... View the full answer