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1) Suppose that a monopolist has the following TC curve: TC=1/2*Q 2 and market demand is given by P=15-0.33Q. Calculate the monopolist's profit max Q
1) Suppose that a monopolist has the following TC curve: TC=1/2*Q2 and market demand is given by P=15-0.33Q.
- Calculate the monopolist's profit max Q and P.
- Show these on a graph.
- What is the monopolist's profit?
- What would the price and quantity be in perfect competition?
- Show on the graph the deadweight loss (lost consumer and producer surplus) from monopoly.
2) If firm I has an elasticity of demand of -2 and firm II has an elasticity of demand of -3.
- Which will these two firms with market power will have a higher price markup? Show this on a graph.
- What is the Lerner Index for the two firms?
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Macroeconomics Policy And Practice
Authors: Frederic Mishkin
2nd Edition
0133424316, 978-0133424317
