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ECON 203 Study Guide - Quiz Guide: Marginal Revenue, Natural Monopoly, Marginal Cost

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ceruleanllama868
23 Mar 2019
School
Concordia University
Department
Economics
Course
ECON 203
Professor
FARHAD SHOKOOHI

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Document Summary

Part ii: short questions: let the demand curves for a monopolist who sells its product in two separated markets to be given by: Q1=50-p1, so marginal revenue for this market is given by mr1=50-2q1. Q2=50-2p2, so marginal revenue for this market is given by mr2=25-q2. For simplicity, let the monopolist to have a constant marginal cost of , and fixed cost is zero, so that. Ans: in market 1, set mr=mc, q=22, p=28; market 2, q=19, p=15. 5. (ii) Ans: in market 1, profit=; market 2, profit=. 5. For the next three questions, assume that the monopoly has to pursue a single-price policy. Let the total demand function be equal to q=100-3p, or p=(100/3)-(1/3)q. (iii) For the single-price monopoly, marginal revenue for this market is given by mr=(100/3)-(2/3)q. Ans: set mr=mc, so q=41, p=19. 66 (notice that this p is in between 15. 5 and 28). (iv) calculate profits.

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Related Questions

Because a monopoly's demand curve is the same as the market demand curve for its product

a. the monopoly's average total cost always falls as it increases its output.
b. the monopoly is a price taker.
c. the monopoly must lower its price to sell more of its product.
d. the monopoly's marginal revenue equals its price.

14. Here are several statements about the demand and output of a monopoly producer: 1. For a monopolist, the change in total revenue brought about by producing an extra unit of output is always less than the current price of that output. II. A monopolist will maximize profit at the output where marginal revenue is as high as possible above marginal cost III. A monopoly firm will maximize profit by producing where demand is inelastic Which of the above statements are true? A) I only B) II only C) III only D) I and II E) I and III F) II and III G) I and II and III ) none of the statements are true

73) In the diagram, marginal revenue is less than price at any given level of output because A) of the unique form of the demand curve in this market. B) in order to sell an additional unit of output the firm must lower the price of that marginal unit of output. C) in order to sell an additional unit of output the firm must lower the price on all units of output. D) in order to lower the price the monopolist must restrict output. E) total revenue is always declining with more units sold.