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cost and demand data for a pure monopolist.




1. In the table below are cost and demand data for a pure monopolist.;Quantity;demanded;Price;Marginal;revenue;Average;cost;Marginal;cost;0;1;2;3;4;5;6;7;8;9;$105.00;96.00;87.00;78.00;69.00;60.00;51.00;42.00;33.00;24.00;$ 96.00;78.00;60.00;42.00;24.00;6.00;12.00;30.00;48.00;$144.00;90.00;70.34;63.00;60.00;58.50;57.86;57.50;57.33;$144.00;36.00;30.00;42.00;48.00;51.00;54.00;55.50;56.00;(a) What is the level of price, output, and amount of profit for an unregulated monopolist?;(b) Using the data in the table, what are the price, output, and profit for a regulated monopolist that sets;price equal to marginal cost compared with an unregulated monopolist?;(c) Using the data in the table, what are the price, output, and profit for a regulated monopolist that;charges a fair-return price (average cost pricing) compared with an unregulated monopolist?;(d) Analyze the effect of regulation on the allocation of resources. Which situation is most efficient?;Which situation is most likely to be chosen by government? Why?;2. The market shares of firms in three different industries are listed in the table below. Use this information;to calculate the Herfindahl index for each industry.;Firms;Industry 1;Industry 2;Industry 3;1;2;3;4;5;Herfindahl;Index;65;15;10;5;5;70;15;10;5;35;35;30;(a) Which industry has the greatest market power? The least?;(b) Based on your findings, is the number of firms in the industry a good predictor of the competitiveness of;an industry? Why or why not?;3. Consider the following payoff matrix in which the numbers indicate the profit in millions of dollars for;a duopoly based either on a high-price or a low-price strategy. Determine the Nash equilibrium.;Firm A;High-price;Low-price;High-price;A = $500;B = $500;A = $650;B = $300;Low-price;A = $300;B = $650;Firm B;A = $400;B = $400;4. A perfectly competitive firm in the factor and product markets sells its output for $1 and pays factors;PL = $9 and Pc = $12. What is the profit-maximizing combination of labor (L) and capital (C) for the;firm?;QL;MPL;QC;MP C;1;2;3;4;5;6;7;28;24;20;16;9;4;2;1;2;3;4;5;6;7;18;15;12;9;6;3;2;5. The table below summarizes the marginal product data for labor in producing personal computers.;Assume the other quantities employed by the firm remain constant.;L;TPL;MPL;Price;TR;MRP;0;0;$1000;1;10;1000;2;18;900;3;24;800;4;28;700;5;30;600;(a) Compute the MPL, TR, and MRP.;(b) What type of market is this for personal computers?


Paper#27374 | Written in 18-Jul-2015

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