Answer this questions by providing the corect answers.
(a) Using the numbers in the graph, identify each of the following. (i) The profit-maximizing output quantity (ii) The profit-maximizing price (b) Assume that the monopolist is profit-maximizing. Using the numbers in the graph, calculate the monopolist's economic profit. Show your work (c) Using the numbers in the graph, identify the profit-maximizing output quantity if the monopolist were able to perfectly price discriminate. 2. GoodEats is a profit-maximizing restaurant currently operating at long-run equilibrium in a monopolistically competitive industry. (a) Draw a correctly labeled graph for GoodEats and show each of the following. (i) The profit-maximizing output and price, labeled as Q" and P* respectively (ii) The long-run equilibrium output and price if GoodEats were instead in a perfectly competitive industry, labeled as Qpc and Ppc respectively (b) Referring to your diagram from part (a), briefly explain one reason why an industry being monopolistically competitive might make it less economically efficient than if it were a perfectly competitive industry. (c) Suppose the monopolistically competitive GoodEats' total fixed costs decreased. Briefly explain the effect on each of the following: (i) GoodEats' profit-mazimizing output and price (ii) GoodEats' short-run economic profit (d) Identify the key way in which the long run equilibrium for a monopoly firm differs from the long-run equilibrium for a firm in monopolistic competition.13. Consider a monopolist facing a market demand p = 10-2q. The monopolist's total cost function is C (q) = 2q. (a) Compute the price elasticity of demand, 7. (Hint: n is a function of q.) (b) Show that 7 = 1 is attained at q = 2.5. (c) Confirm that n > 1 ifq 2.5. (d) Compute the monopolist's optimal output, q's, and price, pull. (e) Is it true that if C" > 0, then profit maximization will always occur at the elastic segment of the demand curve? (Hint: Compute n at q .) (f) Show that R' = p (1 - 2 ) holds at the monopolist's optimal output, q's, and price,3. Michelle maximizes utility by setting MRS=1+r as she is planning over a two-year period. She earns $80,000 this year and $100,000 next year. The marginal rate of substitution (MRS) of MRS=4C1\\CO. The interest rate is 2%. 3a. Write down the two-period budget constraint in terms of Co and C1 (the two-period budget constraint must only have numbers, C0 and 0.). 3b. Calculate how much is consumed in the first year (Co). 3c. Calculate savings and explain your answer. Showr how to use savings and year 2 earnings to determine his year two consumption (C1). 30 - Marginal cou Market demand Marginal revenue 35 50 70 235-35 Q 17.5.35 Figure 10.5 12) Suppose that Figure 105 shows a monopolist's demand curve, marginal revenue, and its cost. The 127 A monopolist would maximize its profit by producing a quantity of and by charging a price AT8, 165 151 50; 550 () 70: $30 D) There is not sufficient information. 13) Suppose that Figure 105 shows a monopolist's demand curve, marginal revenor, and its cast. At 13) the profit maximizing output level and price, the consumer surplus would be B) $1,235. (746125. 14) Suppose that Figure 10.5 shows an industry's market demand, its marginal revenue, and the 14) production costs of a representative firm. If the industry was perfectly competitive, it will produce a quantity of and charge a price of AJ 35: 565 B) 50, 450 () 70, $30 D) There is not sufficient information. 15) Suppose that Figure 10.5 shows an industry's market demand, its marginal revenue, and the 15) production costs of a representative firm. If the industry was perfectly competitive, the consumer surplus would be: Aj $2,450. B) $1,225. C) $6125. D) $262 5. 16) Refer to Figure 10.5. The deadweight loss associated with the monopoly would be: 16) A) $787.5. B) $612 5. () $762.5. D) There is not sufficient information
