Docsity
Docsity

Prepare for your exams
Prepare for your exams

Study with the several resources on Docsity


Earn points to download
Earn points to download

Earn points by helping other students or get them with a premium plan


Guidelines and tips
Guidelines and tips

Price and Output Determination for a Monopolist, Assignments of Microeconomics

A demand and cost schedule for a monopolist, along with instructions for calculating total revenue, marginal revenue, profit-maximizing output, price, and profit. The document also requires students to graph the demand curve, marginal revenue curve, and profit curve, and determine the allocatively efficient price and output under government regulation.

Typology: Assignments

Pre 2010

Uploaded on 08/18/2009

koofers-user-df1
koofers-user-df1 🇺🇸

10 documents

1 / 4

Toggle sidebar

This page cannot be seen from the preview

Don't miss anything!

bg1
THE PROBLEM BELOW IS DUE FOR HOMEWORK ON THURSDAY, MARCH 26.
Note: Because our next exam is on Tuesday, Mar. 31, we will be going over this problem in class on
Thursday, Mar. 26. THUS, I WILL ACCEPT NO HOMEWORKS AFTER I COLLECT THEM IN CLASS ON
MARCH 26.
NAME__________________________
TOTAL POINTS = 40
2. Suppose that a pure monopolist has the following demand schedule and short-run
cost schedule:
Q P TR MR TC ATC AVC MC
0 200 --- 200 --- --- ---
1 180 260 260 60 60
2 160 315 157.5 57.5 55
3 140 365 121.67 55 50
4 120 425 106.25 56.25 60
5 100 495 99 59 70
6 80 575 95.83 62.5 80
7 60 665 95 66.43 90
8 40 765 95.63 70.63 100
9 20 875 97.22 75 110
a. Calculate Total Revenue and Marginal Revenue for each level of output
and put in the chart above. Show one calculation of each. (10 points)
pf3
pf4

Partial preview of the text

Download Price and Output Determination for a Monopolist and more Assignments Microeconomics in PDF only on Docsity!

THE PROBLEM BELOW IS DUE FOR HOMEWORK ON THURSDAY, MARCH 26.

Note: Because our next exam is on Tuesday, Mar. 31, we will be going over this problem in class on Thursday, Mar. 26. THUS, I WILL ACCEPT NO HOMEWORKS AFTER I COLLECT THEM IN CLASS ON MARCH 26. NAME__________________________ TOTAL POINTS = 40

  1. Suppose that a pure monopolist has the following demand schedule and short-run cost schedule : Q P TR MR TC ATC AVC MC 0 200 --- 200 --- --- --- 1 180 260 260 60 60 2 160 315 157.5 57.5 55 3 140 365 121.67 55 50 4 120 425 106.25 56.25 60 5 100 495 99 59 70 6 80 575 95.83 62.5 80 7 60 665 95 66.43 90 8 40 765 95.63 70.63 100 9 20 875 97.22 75 110 a. Calculate Total Revenue and Marginal Revenue for each level of output and put in the chart above. Show one calculation of each. (10 points)

b. Assume the government lets the monopolist operate freely. Determine the monopolist’s: i. Profit-maximizing (or loss-minimizing) level of output. ii. Price. iii. The profit or loss earned at the optimal level of output. Show calculations and explain reasoning clearly. (9 points)

d. Suppose that the government decides to regulate this monopolist. Suppose the government wants the monopolist to produce the allocatively efficient amount of output. i. What price will the government force the monopolist to charge for each unit of output it sells? Why? ii. How much output will the monopolist produce and sell at this price? ( NOTE: In forcing the monopolist to charge the same price no matter how much output it sells, the government is forcing the monopolist to behave as a perfectly competitive firm ). iii. What is the monopolist’s profit? iv. If the government continues to force the monopolist to charge this price, do you think the monopolist will want to continue producing the product in the long-run? (Assume the ATC and MC curves pertain to the long-run). Why or why not? Explain your reasoning clearly. (11 points)