ECON 1030: Micro and Macroeconomics II
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636738393092 
Type of Project

ESSAY

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PHD VERIFIED

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APA

Academic Sources

10

Page Count

312 PAGES

Instructions/Descriptions
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Homework Assignment 5
(Due at the start of class on Monday Nov. 4, 2019)
 A monopolist faces a market demand curve that is given by P= 1,050 – 50Q.
P 
Q 
TR 
MR 
TC 
ATC 
MC 
$1,050 
0 
$0 
– 
$0 
– 
– 

1 



$625.00 


2 



$637.50 


3 



$650.00 


4 



$662.50 


5 



$675.00 


6 



$687.50 


7 



$700.00 


8 



$712.50 


9 



$727.00 

 Fill in the blanks in the table, which shows the monopolist’s costs and revenue situations.
 With reference to the table, what is the profitmaximizing output level (Qm) for the monopolist? What price (Pm) will she charge at that output level? Indicate the rule that you employed to find the answer.
 With the profitmaximizing decision that you obtained in part 1.b above, what is the monopolist’s profit? Show how you obtained your answer.
 In a LARGE diagram sketch the information from the table that you filled out in part 1.a (but do not include the TRand TCnumbers in your diagram). Mark Pm and Qm in the diagram. Shade the area that represents the monopolist’s profit. Indicate which area represents the deadweight loss that is attributable to the monopolist’s behavior.
 Suppose the MCcolumn in the table in part 1.a above represents the aggregated MCcurves of all the firms in a perfectly competitive industry. Also assume that the P and Qcolumns together represent the market demand facing this competitive industry. What would be the equilibrium price (Pc) and equilibrium quantity (Qc) in that competitive market?
 What is the magnitude of the Dead Weight Loss?
 Suppose that a monopolist can identify two distinct groups of customers, students and nonstudents. The demand by students Qdsis given by Qds= 60 – 5Ps and the demand for nonstudents Qdn is given by Qdn = 303Pn. The total demand for the firm’s product—both students and nonstudents
(Qdtot = Qds + Qdn) is then Qdtot= 90 8Ptot. The firm’s cost is $7.00 per unit regardless of the number produced and there are no fixed costs. (assume you can’t sell fractions of units).
 Fill in the blanks in the tables, which show the monopolist’s costs and revenue situations. (hint: solve for the inverse demand equations)
Students 

NonStudents 
Ps 
Qds 
TRs 
MRs 
MC 

Pn 
Qdn 
TRn 
MRn 
MC 

0 





0 




1 





1 




2 





2 




3 





3 




4 





4 




5 





5 




6 





6 




7 





7 




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9 




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15 



 With reference to the table, what is the profitmaximizing output level and price to charge the students?
 With reference to the table, what is the profitmaximizing output level and price to charge the non students?
 How much profit is made off of students? (remember Profit=TRTC)
 How much profit is made off of nonstudents?
 How much profit is made if the firm can price discriminate (profit from both students and nonstudents)
Now suppose the monopolist is unable to segment the market between students and nonstudents, which means it only sees the total demand curve of Qtot= 90 8Ptot.
 Fill in the blanks in the tables, which show the monopolist’s costs and revenue situations.
Pt 
Qdtot 
TRtot 
MRtot 
MC 

0 




1 




2 




3 




4 




5 




6 




7 




8 




9 




10 




11 




12 




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18 



 With reference to the table, what is the profitmaximizing output level and price to charge all customers?
 How much profit does the monopolist make when it cannot price discriminate?
 Compare the profit when the monopolist can price discriminate and when it cannot.
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