ECON 201 Lecture Notes - Lecture 13: West Bank Areas In The Oslo Ii Accord, Deadweight Loss, Price Discrimination

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bronzesardine506

24 Feb 2015

School

University of Calgary

Department

Economics

Course

ECON 201

Professor

A L L

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Document Summary

Chapter 15 lots of exam questions: tools from chapter 13. Last column is between the two lines, not beside. Tr = p*q (same as total expenditure) Mc = change in tc / change in q. = (p * q) (q * atc) Atc not on the above diagram we cannot calculate the profit in this case for the monopolist. Green mc = atc (ac) Mr = mc at yellow dot. Find quantity at qmonop. Find price based off of demand curve (pm) Consumer surplus above price and below demand (pm b d) Recall: atc = tc/q tc = ac*q. Consumer surplus above price and below demand (pc e t) Economic profit = tr tc = oqcepc oqcepc = zero. Compare cs for both monopoly and pc. Cannot account for a e b deadweight loss for monopoly. Monopolist produces too few items for too high a price have deadweight loss (abe)

Related Questions

With the total revenue curve of Problem 1 and the total-cost curve of Problem 7, derive the total profit function and show how the firm determines the profit-maximizing level of output.

q	TR	TC	Profit = TR-TC	MR = Change in TR/Change in Q	MC = Change in TC/Change in Q
0	0	1	-1
1	8	12	-4	8
2	14	14	0	6
3	18	15	3	4
4	20	20	0	2

Please find MC above. Do I have the formula right?

1. Assume a monopoly has the following demand schedule:

Price (P) Quantity (Q)

$20 200

15 300

10 500

5 700

(a) Calculate total revenue (TR) at each P and Q combination.

(b) Calculate marginal revenue per unit for each decrease in price.

(c) For the change in price from $20 to $15, calculate the interval elasticity of demand. Is demand elastic or inelastic?

(d) For the change in price from $20 to $15, obtain the Lerner index.

aquamarinetiger116

PROFIT MAXIMIZATION

Reminders:

Q: Quantity, TC: Total Costs, VC: Variable Costs, MC: Marginal Costs, MR: Marginal Revenue, TR: Total Revenue

1. Suppose the market for DVD movies is perfectly competitive. The industry price for the movies is $24, and a typical firm has the following total cost data:

Q	TC	VC	MC	MR	TR	Net Profit
0	10
1	33
2	53
3	70
4	90
5	114
6	143

a. Calculate the TR, MR, and MC for each level of output.

b. What condition must be met for the firm to maximize profits? What is the profit maximizing level of output and price for this firm? How much profit would be made?

2. Now suppose that some firms have been able to differentiate their DVDs, and the market has become monopolistically competitive. A typical firm now has the following demand schedule and total cost data:

Q	P	TC	VC	MC	MR	TR	Net Profit
0	40	8
1	35	20
2	30	28
3	25	40
4	20	56
5	15	76
6	10	100

a. Calculate the TR, MR, and MC for each level of output.

b. What condition must be met for the firm to maximize profits? What is the profit maximizing level of output and price for this firm? How much profit would be made?

ECON 201 Lecture Notes - Lecture 13: West Bank Areas In The Oslo Ii Accord, Deadweight Loss, Price Discrimination

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