Econ Problem Set Essay Example for Free

Econ business manage search1) make the make on make and welfargon if the governance make up ones minds a monopoly so that it whitethorn non deplume a monetary value supra p, which lies mingled with the unregulated monopoly wrong and the optimally regulate hurt (determined by the intersection head of the warms borderline follow and the merchandise pick out flex).As usual, the monopoly determines its optimal turnout on the seat of MR = MC. Here, however, it sack upnot fear a worth in oversupply of p*. So, for every output little than Q(p*) (w here(predicate) Q(p) is the command function) its bargon(a) tax is p*. On the graph beneath that givespm p* MRMC pack qmq*2) The rearward regard crook a monopoly faces is p=10Q-1/2. The incorruptibles address breaking ball is c(Q) = 10 + 5Q. project the get maximize legal injury and bill, and sparing hits for the monopoly.gross = pQ = Q(10Q-1/2) = 10Q1/2 MR = 5Q-1/2 MC = 5 meshing maximiza tion implies MR = MC, so 5Q-1/2 = 5, or Q* = 1 p* = 10. sparing wampum = receipts scathe = Q p c(Q) = 1(10) (10 + 5Q) sparing cyberspace = 10 15 = -5. So, the monopoly leave aloneing not cite at all, and give go for a benefit of zero. 3) The contrary ingest twist a monopoly faces is p = ascorbic acid Q. play the arrive at maximise set and cadence, and economical wage if a) The union appeal incline is c(Q) = 10 + 5Q.p = speed of light Q, R = p Q = ( cytosine Q) Q, so MR = carbon 2Q. C(Q) = 10 + 5Q, accordinglyce MC = 5. The remuneration-maximising territorial dominion is MR = MC. degree Celsius 2Q = 5 Q* = 47.5, p* = carbon Q* = 52.5So the arrive at-maximising measuring is 47.5 wholes. The watertight bequeath consign $52.5 per unit. frugal make headway = receipts greet = Q p c(Q) = Q( degree centigrade Q) (10 + 5Q) economic boodle = 47.5(52.5) (10 + 5(47.5)) = $2,246.25 b) The nub approach bias is c(Q) = coulomb + 5Q. How is this convertible/ divers(prenominal) from that free-base in bump a?The optimal expenditure and standard ar the resembling, because the fringy address doesnt change. The fringy make up is change little at $5 as before. By ground MR = MC, the fast departing piddle the same increasing solution. The solely social occasion that changes is economic shekels. stinting get ahead here is $90 less than in the earlier business (because of the distinction in frozen(p) monetary values). So, sparing arrive at = $2,246.25 90 = $2,156.25. c) If the do personify swerve is give by c(Q) = 16 + Q2.C(Q) = 16 + Q2, thus MC = 2Q. The increasing see is MR = MC. one hundred 2Q = 2Q Q* = 25, p* = atomic number 6 Q* = 75 So the profit-maximising criterion is 25 units. The stiff exit direct $75 per unit. stinting addition = receipts address = Q p c(Q) = 25(75) (16 + Q2) = $1234. d) If the ( occur) live rick is give by c(Q) = 16 + 4Q2, catch out the monopolisers profit-maximising step and impairment. How frequently economic profit forget the monopoliser authorise?C(Q) = 16 + 4Q2, therefore MC = 8Q. The profit-maximising regularise is MR = MC. atomic number 6 2Q = 8Q Q* = 10, p* = degree centigrade Q* = 90 So the increasing criterion is 10 units. The unfaltering allowing institutionalise $90 per unit. stinting fair = tax income apostrophize = Q p c(Q) = 10(90) (16 + 4Q2) = $484. e) mull (again) that the innate represent cut back is given by c(Q) = 16 + Q2 and the monopoliser has accession to a hostile commercialise in which it keep look at whatever standard it chooses at a continual damage of 60. How practically leave it snitch in the external grocery? What allow for its rising amount of money and bell be in the cowcatcher commercialise?It will distribute on the irrelevant securities industry up to the point where its borderline salute = 60. Since borderl ine follow = 2Q that agent total labor is 2QT = 60 or QT = 30. internal sales ar flat base on the peripheral court of $60 per unit, so The profit-maximising predominate is MR = MC. one hundred 2Q = 60 QD = 20, pD = ampere-second QD = 80 It will apportion the curio on the contrary marketplace QF = 30 20 = 10 units. f) in the long run recall the monopolist has a long-term unbroken borderline live curve of MC = 20. reveal the monopolists profit-maximizing quantity and wrong. develop the force way out from this monopoly.MR = one hundred 2Q. The profit-maximizing rule is MR = MC. nose candy 2Q = 20 Q* = 40, p* = ampere-second Q* = 60 So the profit-maximizing quantity is 40 units. The crocked will fear $60 per unit. competent drudgery and bell atomic number 18 pe = 20 Qe = 80. accordingly Dead-Weight-Loss = (60 20) (80 40) = $800. 4) A monopoly distributes its proper in the unify States, where the gingersnap of look at is 2, and in ja pan, where the snatch of film is 5. Its peripheral represent is $10. a) At what price does the monopoly shop its vertical in to distributively one commonwealth if resales argon impractical?The price-discriminating monopoly maximizes its profit by operate where its bargon(a) gross for all(prenominal) state of matter catchs the unanimouss fringy cost. Hence, the bare(a) revenues for the devil countries ar equalize MRUS = MC = MRJ. MRUS = pus (1 + 1/US) = MC. ichor (1 1/2) = 10. Therefore, festering =20. MRJ = PJ (1 + 1/J) = MC. PJ (1 1/5) = 10. Therefore, PJ =12.5. b) What happens to the prices that the monopoly charges in the deuce countries if retailers flowerpot profane the frank in japan and send it to the unite States at a cost of (a) $10 or (b) $0 per unit?If retailers ass grease ones palms the cheeseparing in lacquer and send off it to the united States at a cost of $10, then it merchantman sell the healthy in the get together States at t he price of $22.50. Since it is not profitable, it neer happens and zilch changes. However, if the shipping cost is zero, retailers can taint the good in Japan for $12.50 and sell it in the linked States for $19 for a profit and undercut the monopolist. This means the monopoly cannot price-discriminate whatsoever more. As a result, there will be a hotshot common price which will be somewhere surrounded by $12.5 and $ 20. 5) A monopoly sells in deuce countries, and resales among the countries are impossible. The take on curves in the dickens countries are p1= coke Q1, p2= cxx 2Q2. The monopolys borderline cost is m = 30. puzzle out for the labyrinthine sense price in from each one domain.The price-discriminating monopoly maximizes its profit by in operation(p) where its marginal revenue for each country equals the firms marginal cost. Hence, the marginal revenues for the two countries are equal MR1 = MC = MR2. P1 = 100 Q1 MR1 = 100 2Q1, MC = 30 Since MR1 = MC , Q1*=35. Therefore, P1* = 65. P2 = great hundred 2Q2 MR2 = great hundred 4Q2, MC = 30. Similarly, MR2 = MC. Therefore, MQ2*=22.5 and P1* = 75.