ECO 461 Lecture Notes - Lecture 6: Root Mean Square, Economic Surplus, Demand Curve

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orchidcamel7

2 Nov 2017

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Firms are able to perfectly identify consumers by their reservation value(s). Each consumer may buy a single product or multiple units of the product. Suppose that the demand curve in a market where each consumer buys a single product can be represented as p = a bq. The rm faces a constant marginal cost of c. draw the market. Suppose a monopolist with cost function c(q) = 0 serves a market with 4 consumers. Each con- sumer will buy a maximum of one unit of the good. R1 = 25, r2 = 20, r3 = 12, r4 = 8. a suppose that the monopolist can practice 1st degree p. d. Now suppose that the rm must charge a uniform price. In the above example, we assume that each person buys only one unit of the good. What if they have individual demand functions where they may buy multiple units of the good. How can the rm employ 1st degree p. d.

Related Questions

3rd degree price discrimination. We have the same market conditions as the previous problem. p1(q1) = 1, 000 â q1 p2(q2) = 500 â q2 This producer also faces a constant marginal cost of 100.

i. If the monopolist is able to effectively conduct 3rd degree price discrimination, what are the optimal price-quantity pairs for each group of consumers?

ii. What is the total CS, PS, and W from both markets?

iii. If the monopolist can only charge a single price, what are the optimal output and price?

iv. How much is sold to each type of consumer?

v. Find the CS, PS, and W for this scenario.

vi. Compare the three welfare measures in the two scenarios.

harlequinwombat678

A monopolist firm serves 6 consumers. Each of the consumers only buy one unit of the good. Two consumers buy one unit if the price is lower or equal than $100 and the other four consumers buy one unit if the price is lower or equal than $10. The firm's cost function is C(Q) = 5Q.

(a) Suppose the firm is restricted to set a single price for all consumers (i.e., no price discrimination). What price does the firm set? How much profit does the firm collect?

(b) How much consumer surplus is generated at the prices identified in (a)?

(c) Suppose the firm is able to set a personalized price for each consumer (i.e., first-degree price discrimination). What prices does the firm set? How much profit does the firm collect?

(d) How much consumer surplus is generated at the prices identified in (c)?

olivewoodchuck297

1) Taxing a monopoly (20 Points) Suppose that a monopolist sells a product to consumers with an aggregate demand that is downward sloping in quantity, D(Q) = 200 â 2Q. The total cost of producing Q units is C(Q) = 20Q + 2Q2 .

a) Identify the unregulated equilibrium (P â , Qâ )

b) What are the consumer and producer surpluses (CS and PS) and total welfare (W) at this equilibrium?

c) Suppose that a specific tax of Ï = 20 is imposed on each unit. i. What price-quantity pair (P 1 , Q1 ) would we expect? ii. What are CS, PS, tax revenue (T), and W? iii. What is deadweight loss?

d) Instead of a specific tax, an ad valorem tax, Î± = 16 is imposed i. What price-quantity pair (P 2 , Q2 ) would we expect? ii. What are CS, PS, T, and W? iii. What is deadweight loss?

e) Welfare distribution i. Which scenario results in the highest producer surplus? ii. Which scenario results in the greatest gains for consumers, assuming that all tax revenues are perfectly redistributed to consumers only.

scarletbadger532

ECO 461 Lecture Notes - Lecture 6: Root Mean Square, Economic Surplus, Demand Curve

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