Write down an expression for the monopolists profit

Assignment Help Business Economics
Reference no: EM131244822

Suppose a monopolist faces a demand curve for its output of P = 300−Q. This means that the marginal revenue curve of the monopolist is M R = 300 − 2Q. Assume that the marginal cost of production is constant and equal to $40.

a) Write down an expression for the monopolists profit, as a function of the quantity of output it produces.

b) If the monopolist must charge the same price for all units of output that it sells (that is, if the monopolist is a single price monopolist), what level of output will maximise the monopolists profit? What price will the monopolist charge? What is its level of profit?

c) If this were a competitive market instead of a monopoly, what level of output would be produced and what price would be charged? What is the level of profit for firms if it were perfectly competitive?

d) Draw a diagram of demand, marginal revenue, and marginal cost that illustrates your answer to part b). From this work out consumer surplus and producer surplus.

e) Draw the same diagram but for your answer to c), the case of the competitive market. From this work out consumer surplus and producer surplus. How much deadweight loss is there from the monopoly? Why?

Reference no: EM131244822

Questions Cloud

Proof read the given paper : Proof read the given paper. Check the paper for grammar. - The objective of this assignment is to Exploratory Data Analysis (EDA) using Watson Analytics.
Identify the critical infrastructure sectors : Identify the Critical Infrastructure Sectors. Choose three of the Sectors and discuss why a certain government agency was identified as the lead agency for that sector. Also discuss what other government agencies you believe should have been inc..
What is the conversion for a 300 k operating temperature : For a reactor space time of 10 min, what is the conversion for a 300 K operating temperature? What is the conversion at 500 K? (Remember: the equilibrium constant depends on temperature.)
What do you think about the notion presented by terris : What do you think about the notion presented by Terris that Lockheed's ethics program does little to prevent ethical breaches at the highest level of the organization?
Write down an expression for the monopolists profit : Suppose a monopolist faces a demand curve for its output of P = 300−Q. This means that the marginal revenue curve of the monopolist is M R = 300 − 2Q. Assume that the marginal cost of production is constant and equal to $40. Write down an expression ..
How much error is introduced by making this change : Calculate the exit temperature and τ for the PFR described in Example 9.4.2 when mole change with reaction is ignored (i.e., εB = 0). How much error is introduced by making this change?
Strategic decision making and enterprise performance : What can you learn by engaging in an environmental scan that can influence strategic decision making and enterprise performance?
Use the revenues to reduce income taxes : Suppose the government decides to impose a tax on gasoline and use the revenues to reduce income taxes in a manner such that consumers' income tax reduction equals the amount of gasoline tax paid. Using indifference curves and budget constraint analy..
According to the harrod-domar growth model : According to the Harrod-Domar growth model, if you want your country to grow at 5%, and the capital output ratio is 2: The nation should save what percentage of the nation’s income = What are the problems of relying on the Harrod-Domar model to make ..

Reviews

Write a Review

 

Business Economics Questions & Answers

  Information and unknowns organized and properly labeled

The Acme Candy Company is preparing to offer a new product called the Minty Dark Chocolate Bite Bar. The material costs per unit of the new candy bar are $0.10 for chocolate, $0.02 for sugar, and $ 0.03 for mint flavoring. Create a table of given inf..

  Ricardian equivalence implies

Ricardian equivalence implies

  Source of demand in the foreign currency exchange market

In open economy, what is the source of demand in the foreign currency exchange market?

  Justify the trade restriction on ball bearings

Which of the subsiquent arguments is the president using to justify the trade restriction on ball bearings

  Determine the projected after-tax rate of return

A corporation expects to receive $32,000 each year for 15 years from the sale of a product. There will be an initial investment of $150,000. Manufacturing and sales expenses will be $8067 per year. Assume straight-line depreciation, a 15-year useful ..

  The equilibrium price of coffee mugs rose sharply

The equilibrium price of coffee mugs rose sharply last month, but the equilibrium quantity was the same as ever. Three people tried to explain this situation. Which explanations could be right? Explain your logic.

  David black representing the management of the automobile

David black, representing the management of the automobile manufacturers disagreed with McDonald's assessment. Black cited studies that indicated price elasticity's ranging from 0.5 to 1.5.

  Labor demand for wheat production and the market wage rate

A country produces two crops– paddy and wheat. Given the price of paddy(Pp) and wheat(Pw), the relationship of labor allocation is shown as MPLpXPp = MPLwXPw = w, where MPLp and MPLw are marginal products of labor for the two. If wheat’s price increa..

  What is the optimal price and quantity for monopoly

A monopoly has the market demand Q = 1000-1000P, with a marginal cost, MC = 0.28. What is the optimal price and quantity for perfect competition? What is the optimal price and quantity for monopoly?

  What type of performance measurement based process

What type of performance measurement based process was used to determine Jack Welch’s successor, Jeffrey Immelt, as CEO of GE?

  Suppose that the price of gasoline at particular station

Suppose that the price of gasoline at a particular station two months ago was $2.80 per gallon (keep it simple—assume one grade of gas). The past month, the price of gas was $3.10 per gallon. Assuming 20,100 gallons were sold two months ago and 20,00..

  What is the GDP growth rate

A) nGDP is $5 trillion in Yr 1 and $5.4 trillion one year later. What is the GDP growth rate?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd