Exam 23: Monopoly-Part A

A monopolist receives a subsidy from the government for every unit of output that is consumed.He has constant marginal costs and the subsidy that he gets per unit of output is greater than his marginal cost of production.But to get the subsidy on a unit of output, somebody has to consume it.

A monopolist produces at a point where the price elasticity of demand is -0.7 and the marginal cost is $2.If you were hired to advise this monopolist on how to increase his profits, you would find that the way to increase his profits is to

An industry has two firms, a leader and a follower.The demand curve for the industry's output is given by p = 208 - 4q, where q is total industry output.Each firm has zero marginal cost.The leader chooses his quantity first, knowing that the follower will observe the leader's choice and choose his quantity to maximize profits, given the quantity produced by the leader.The leader will choose an output of

The demand for a monopolist's output is 10,000 divided by the square of the price it charges.The monopolist produces at a constant marginal cost of $5.If the government imposes a sales tax of $10 per unit on the monopolist's output, the monopolist price will rise by

A profit-maximizing monopoly faces an inverse demand function described by the equation p(y)= 30 - y and its total costs are c(y)= 5y, where prices and costs are measured in dollars.In the past it was not taxed, but now it must pay a tax of 2 dollars per unit of output.After the tax, the monopoly will

The Cleveland Visitors Bureau is the exclusive national marketer of weekend getaway vacations in Cleveland, Ohio.At current market prices, the price elasticity of demand is -0.50.To maximize profits, the bureau should

A profit-maximizing monopolist faces a downward-sloping demand curve that has a constant elasticity of -4.The firm finds it optimal to charge a price of $24 for its output.What is its marginal cost at this level of output?

The demand for a monopolist's output is 6,000/(p + 3)², where p is its price.It has constant marginal costs equal to $6 per unit.What price will it charge to maximize its profits?

A monopolist faces a constant marginal cost of $1 per unit and has no fixed costs.If the price elasticity of demand for this product is constant and equal to -3, then

In some parts of the world, Red Lizzard Wine is alleged to increase one's longevity.It is produced by the process Q =min{(1/4)L, R}, where L is the number of spotted red lizards and R is gallons of rice wine.P_L = P_R = $1.Demand for Red Lizzard Wine in the United States is Q = 900P=^-2 A^1/2.If the advertising budget is $144, the quantity of wine which should be imported into the United States is

A monopolist faces the demand function Q = 7,000/(p + 3)=^-=².If she charges a price of p, her marginal revenue will be

A profit-maximizing monopoly faces an inverse demand function described by the equation p(y)= 40 - y and its total costs are c(y)= 7y, where prices and costs are measured in dollars.In the past it was not taxed, but now it must pay a tax of 6 dollars per unit of output.After the tax, the monopoly will

Since a monopoly makes excess profits beyond the normal rate of return on investment, an investor is likely to get a higher rate of return in the stock market by investing in monopolistic rather than in competitive industries.

A monopolist has constant marginal costs of $1 per unit.The demand for her output is 1,000/p if p is less than or equal to 50.The demand is 0 if p > 50.What is her profit maximizing level of output?

A certain monopolist has a positive marginal cost of production.Despite this fact, the monopolist decides to produce a quantity of output that maximizes total revenues.Assume that the marginal revenue curve for this monopolist always has a negative slope.Then the monopolist

A monopolist has decreasing average costs as output increases.If the monopolist sets price equal to average cost, it will

The Fabulous 50s Decor Company is the only producer of pink flamingo lawn statues.While business is not as good as it used to be, in recent times the annual demand has been Q = 700 - 5P.Flamingo lawn statues are handcrafted by artisans using the process Q = min{L, P/7F1} where L is hours of labor and P is pounds of pink plastic.P_L = 20 and P_P = 2.What would be the profit-maximizing output and price?

A monopolist faces the demand curve q = 90 - p/2, where q is the number of units sold and p is the price in dollars.She has quasi-fixed costs, C, and constant marginal costs of $20 per unit of output.Therefore her total costs are C + 20q if q > 0 and 0 if q = 0.What is the largest value of C for which she would be willing to produce positive output?

The demand curve for the output of a certain industry is linear; q = A - Bp.There are constant marginal costs of C.For all values of A, B, and C such that A > 0, B > 0, and 0 < C < A/B,

An obscure inventor in Strasburg, North Dakota, has a monopoly on a new beverage called Bubbles, which produces an unexplained craving for Lawrence Welk music.Bubbles is produced by the following process: Q = min{R/2, W}, where R is pulverized Lawrence Welk records and W is gallons of North Dakota well water.P_R = P_W = $1.Demand for Bubbles is Q = 576P^-2A^0.5.If the advertising budget for Bubbles is $81, the profit-maximizing quantity of Bubbles is