Exam 23: Monopoly-Part A

A monopolist enjoys a monopoly over the right to sell automobiles on a certain island.He imports automobiles from abroad at a cost of $10,000 each and sells them at the price that maximizes profits.One day, the island's government annexes a neighboring island and extends the monopolist's monopoly rights to this island.People on the annexed island have the same tastes and incomes and there are just as many people as on the first.

The demand for a monopolist's output is 6,000/(p + 2)², where p is the price it charges.At a price of $3, the elasticity of demand for the monopolist's output is

The demand for a monopolist's output is 3,000/(p + 2)², where p is the price it charges.At a price of $3, the elasticity of demand for the monopolist's output is

A monopolist faces the inverse demand curve p = 120 - 6q.At what level of output is his total revenue maximized?

Since a monopoly charges a price higher than marginal cost, it will produce an inefficient amount of output.

A major software developer has estimated the demand for its new personal finance software package to be Q = 1,000,000P^-2 while the total cost of the package is C = 100,000 + 25Q.If this firm wishes to maximize profit, what percentage markup should it place on this product?

A profit-maximizing monopolist faces a demand function given by q = 1000 - 20p, where p is the price of her output in dollars.She has a constant marginal cost of 20 dollars per unit of output.In an effort to induce her to increase her output, the government agrees to pay her a subsidy of $10 for every unit that she produces.She will

The demand for a monopolist's output is 6,000/(p + 7)², where p is its price.It has constant marginal costs equal to $5 per unit.What price will it charge to maximize its profits?

A monopolist has the total cost function c(q)= 750 + 5q.The inverse demand function is 140 - 7q, where prices and costs are measured in dollars.If the firm is required by law to meet demand at a price equal to its marginal costs,

Charlie can work as many hours as he wishes at a local fast-food restaurant for a wage of $4 per hour.Charlie also does standup comedy.Since Charlie lives in a quiet, rather solemn Midwestern town, he is the town's only comedian and has a local monopoly for standup comedy.The demand for comedy is Q = 40 - P, where Q is the number of hours of comedy performed per week and P is the price charged per hour of comedy.When Charlie maximizes his utility, he spends at least 1 hour per week working at the restaurant and he gets at least 1 hour of leisure time.His utility depends only on income and leisure.How many hours per week does he perform standup comedy?

A computer software firm has developed a new and better spreadsheet program.The program is protected by copyrights, so the firm can act as a monopolist for this product.The demand function for the spreadsheet is q = 50,000 - 100p.Any single consumer will want only one copy.The marginal cost of producing and distributing another copy and its documentation is just $10 per copy.If the company sells this software at the profit-maximizing monopoly price, the number of consumers who would not buy the software at the monopoly price but would be willing to pay at least the marginal cost is

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?

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 = 10 - 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 $30.Since the inventor has a patent on Slops, it can be a monopolist in this new industry.

A profit-maximizing monopolist sets

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 = 20 - p.The firm has a patent on zwiffle, so it can have a monopoly in this market.

A profit-maximizing monopolist has the cost schedule c(y)= 20y.The demand for her product is given by y = 600/p⁴, where p is her price.Suppose that the government tries to get her to increase her output by giving her a subsidy of $15 for every unit that she sells.Giving her the subsidy would make her