Exam 23: Monopoly-Part A

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.He has quasi-fixed costs, C, and constant marginal costs of $20 per unit of output.Therefore his total costs are C + 20q if q > 0 and 0 if q = 0.What is the largest value of C for which he would be willing to produce positive output?

The demand for copies of the software package Macrosoft Doors is given by Q = 10,000P^-2.The cost to produce Doors is C = 100,000 + 5Q.If Macrosoft practices cost plus pricing, what would be the profit-maximizing markup?

Peter Morgan sells pigeon pies from his pushcart in Central Park.Due to the abundant supplies of raw materials, his costs are zero.The demand schedule for his pigeon pies is p(y)= 150 - y/3.What level of output will maximize Peter's profits?

A profit-maximizing monopolist faces a downward-sloping demand curve that has a constant elasticity of -3.The firm finds it optimal to charge a price of $12 for its output.What is its marginal cost at this level of output?

If the interest rate is 10%, a monopolist will choose a markup of price over marginal cost of at least 10%.

For a monopolist who faces a downward-sloping demand curve, marginal revenue is less than price whenever quantity sold is positive.

A profit-maximizing monopolist faces the demand curve q = 100 - 3p.It produces at a constant marginal cost of $20 per unit.A quantity tax of $10 per unit is imposed on the monopolist's product.The price of the monopolist's product

The town council of Frostbite, Ontario, is trying to decide whether to build an outdoor skating rink which would cost $1 million and last for only one season.Operating costs would be zero.Yearly passes would be sold to anyone who wanted to use the rink.If p is the price of the pass in dollars, the number demanded would be q = 1200 - .6p.The council has asked you to advise them on building the rink.You should tell them that

A monopolist faces a constant marginal cost of $1 per unit.If at the price he is charging, the price elasticity of demand for the monopolist's output is -0.5, then

A monopolist with constant marginal costs faces a demand curve with a constant elasticity of demand and does not practice price discrimination.If the government imposes a tax of $1 per unit of goods sold by the monopolist, the monopolist will increase his price by more than $1 per unit.

In some parts of the world, Red Lizzard Wine is alleged to increase one's longevity.It is produced by the process Q = min{(1/3)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 =576P^-2 A^1/2.If the advertising budget is $121, the quantity of wine which should be imported into the United States is

Peter Morgan sells pigeon pies from his pushcart in Central Park.Due to the abundant supplies of raw materials, his costs are zero.The demand schedule for his pigeon pies is p(y)= 80 - y/4.What level of output will maximize Peter's profits?

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 = 400 - 6P.Flamingo lawn statues are handcrafted by artisans using the process Q = min{L, P/2}where L is hours of labor and P is pounds of pink plastic.P_L = 15 and P_P = 3.What would be the profit-maximizing output and price?

A firm has invented a new beverage called Slops.It doesn't taste very good, but it gives people a craving for Lawrence Welk's music and Professor Johnson's jokes.Some people are willing to pay money for this effect, so the demand for Slops is given by the equation q = 14 -p.Slops can be made at zero marginal cost from old-fashioned macroeconomics books dissolved in bathwater.But before any Slops can be produced, the firm must undertake a fixed cost of $54.Since the inventor has a patent on Slops, it can be a monopolist in this new industry.

The demand curve facing a monopolist is D(p)= 100/p if p is 20 or smaller and D(p)= 0 if p > 20.The monopolist has a constant marginal cost of $1 per unit produced.What is the profit-maximizing quantity of output for this monopolist?

A monopolist faces a downward-sloping demand curve and has fixed costs so large that when she maximizes profits with a positive amount of output, she earns exactly zero profits.At this positive, profit-maximizing output,

A baseball teams attendance depends on the number of games it wins per season and on the price of its tickets.The demand function it faces is Q = N(20 - p), where Q is the number of tickets (in hundred thousands)sold per year, p is the price per ticket, and N is the fraction of its games that the team wins.The team can increase the number of games it wins by hiring better players.If the team spends C million dollars on players, it will win .7 - 1/C of its games.Over the relevant range, the marginal cost of selling an extra ticket is zero. a.Write an expression for the firms profits as a function of ticket price and expenditure on players. b.Find the ticket price that maximizes revenue. c.Find the profit-maximizing expenditure on players and the profit-maximizing fraction of games to win.

A firm has discovered a new kind of nonfattening, non-habit-forming dessert called zwiffle.It doesn't taste very good, but some people like it and it can be produced from old newspapers at zero marginal cost.Before any zwiffle could be produced, the firm would have to spend a fixed cost of $F.Demand for zwiffle is given by the equation q =12 - p.The firm has a patent on zwiffle, so it can have a monopoly in this market.

The demand for Professor Bongmore's new book is given by the function Q = 5,000 - 100p.If the cost of having the book typeset is $9,000, if the marginal cost of printing an extra copy is $4, and if he has no other costs, then he would maximize his profits by

A major software developer has estimated the demand for its new personal finance software package to be Q =1,000,000P^-1.40 while the total cost of the package is C = 100,000 + 20Q.If this firm wishes to maximize profit, what percentage markup should it place on this product?