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- Monopoly firm a. When a best-selling book was first released in paperback, the Hercules Bookstore chain seized a profit opportunity by setting a selling price of $9 per book (well above Hercules’ $5 average cost per book). With paperback demand given by P = 15 - .5Q, the chain enjoyed sales of Q =12 thousand books per week. (Note: Q is measured in thousands of books.) Draw the demand curve and compute the bookstore’s profit and the total consumer surplus. b. For the first time, Hercules has begun selling books online—in response to competition from other online sellers and in its quest for new profit sources. The average cost per book sold online is only $4. As part of its online selling strategy, it sends weekly e-mails to preferred customers announcing which books are new in paperback. For this segment, it sets an average price (including shipping) of $12. According to the demand curve in part (a), only the highest value consumers (whose willingness to pay is $12 or more)…Blue INK is the only cabel service provider in Gazipur. The diagram below depicts the price, output and costs incurred by Blue INK. Use the graph to answer the following questions: 1. What is the Total revenue generated by Blue INK at the profit maximizing level of output? 2. If the Cable Service Market turns into a Perfectly Competitive Market, what will be the total ammount of the service provided? 3. If the market turns into a Monopoly market again, what will be the total deadweight loss created?Monopoly firms are a lot more profitable than perfectly competitive firms. The primary reason is that the monopoly firm charges a price that is greater than marginal cost at the profit maximizing quantity. Explain this statement with a graph. Specifically, explain how the profit maximizing quantity and price are determined.
- Q1. Consider the following graph for a pure monopoly firm selling electricity. (a)What are the profit maximization output and price? How much is the profit? (b)Suppose the demand for electricity increases due to the unusually cold weather. Would the profit maximizing output increase or decrease? What about the price?2. Suppose the cost function for a monopoly is given by TC =F+c.q where TC is the total cost, F is the fixed cost and q is the output of the firm. The demand function for the monopoly is given by q = A-bP where A > 0 and b > 0. Find out the profit maximizing price, quantity, and profit for the monopoly. Also find out the expression for the marginal revenue of the monopoly as well as the elasticity of demand facing the monopoly.5(Chapter 11 Monopoly) The inverse demand for an app is P = PD (Q) = 30 - 0,4. Q. The inverse demand function indicated the price P, were the quantity Q will be sold. The app is sold just from the app developer. The programing of the app creats fixed costs of 420. The marginal costs are 2. a) Draw the demand curve b) Calculate the marginal revenue and the average cost function. Draw the marginal revenue and marginal cost function in the diagram of a). c) Determine the profit maximizing quantity and price. What are the average costs? What is the profit? Draw the average cost curve and the profit in the diagram. Show the consumer surplus (CS) and producer surplus (PS). d) What are the price and quantity if you a have fixed costs of 490? What is the profit? e) Consider the case that the developer of the App wants to maximize the overall welfare and not just his profit. Determine price and quantity. What is the profit? Show CS and PS. f) Draw the welfare losses of the Monopoly, which occur…
- Define the income elasticity of demand What is a normal and an inferior good? Define the cross-price elasticity of demand Compare and contrast monopoly and perfect competition market structure in long-run.Ab 50 Economics An cement making monopolist with a marginal cost curve of MC=Q was originally faced with a demand curve: P=20-2Q. However, due to an increase in demand for housing, demand shifted to: P=35-2Q. Calculate the change in price and quantity due to this shift in demand. a. An increase in P = 9, and increase in Q = 3. b. An increase in P = 12, and increase in Q = 4. c. An increase in P = 21, and increase in Q = 7 d. Impossible to determine with the given information.Price (Dollars per Garment) 7 D E 5 АС-МC Demand Marginal Revenue 20 Garments cleaned per year (millions) The long run average and marginal cost of dry-cleaning services is $5, as shown in the graph. Given the demand curve and the marginal revenue curve shown in the graph, which of the following is true? Select one: O . If the industry were served by a profit-maximizing monopoly, the price of dry-cleaning services would be $7 per garment. Ob. If the industry were perfectly competitive, 10 million garments would be cleaned each year. If the market were served by a profit-maximizing monopoly, the price of dry-cleaning services would be $5 per garment and monopoly economic profit would be zero. O d. If the industry were perfectly competitive then the long-run equilibrium price of dry-cleaning services would be $7 per garment.
- Question 5: Jimmy has a room that overlooks, from some distance, a major league baseball stadium. He decides to rent a telescope for $50 a week and charge his friends and classmates to use it to peep at the game for 30 seconds. He can act as a monopolist for renting out "peeps". For each person who takes a 30 second peep, it costs Jimmy $.20 to clean the eyepiece. Jimmy believes he has the following demand for his service: Price of a Peep $1.20 Quantity of peeps demanded 1.00 90 100 150 200 250 300 70 60 50 350 40 30 400 450 20 10 500 550 a) For each price, calculate the total revenue from selling peeps and themarginal revenue per peep. Price Quantity TR MR $1.20 100 90 100 150 200 70 250 60 300 350 50 40 30 400 450 20 500 10 550 b) At what quantity will Jimmy's profit be maximized? What price will he charge? What will his total profit be? c) Jimmy's landlady complains about all the visitors coming into the building and tells Jimmy to stop selling peeps. Jimmy discovers, though, if he…3. A firm is considering bidding for the franchise to sell cola and hot dogs at a baseball stadium. It estimates the demand functions for cola and hot dogs respectively as De=20-4pc-PH DH = 15-Pc-5PH where De is demand for cola in thousands (of cans), DH is demand for hot dogs in thousands, pc is the price of a can of cola in dollars, and PH is the price of a hot dog. The unit cost of supplying a hot dog is constant at $0.1, and the unit cost of a can of cola is likewise constant at $0.5. (a) Find the upper limit to the amount the firm would bid for the franchise.1. Since a firm in monopoly sets its own price, we can write the price as a function of the quantity (the inverse demand function). Write the inverse demand function and interpret the equation you obtain. 2.Using the inverse demand function, write the profit of the firm as a function of q.