Given a monopolist who has identified two submarkets or group of buyers for its product with demand schedule: 𝐺𝑟𝑜𝑢𝑝 1: 𝑄1𝐷=40 − 5𝑃1 𝑎𝑛𝑑 𝐺𝑟𝑜𝑢𝑝 2: 𝑄2𝐷=60 −10𝑃2 The short run total cost curve of the monopolist is: 𝑆𝑇𝐶: 𝐶(𝑄)= 0.25𝑄2+120, where 𝑄 = 𝑄1+ 𝑄2, with 𝑄1 𝑎𝑛𝑑 𝑄2 as quantities in submarkets 1 and 2 respectively. 𝑃1 𝑎𝑛𝑑 𝑃2 are the units prices in (rands) in submarkets 1 and 2 Find: a) The profit maximizing outputs. (9) b) The profit maximizing price for each submarket. (4) c) The maximum total revenue and total cost for the submarkets (4) d) The monopolist’s profit for the submarkets (2) e) Verify that this combination gives the maximum profit. (6) ..

A monopoly firm faces a typical downward-sloping demand (D) curve, a corresponding downward-sloping marginal revenue (MR) curve below the demand curve, and an upward-sloping marginal cost (MC) curve. It currently produces at an output level of 100,000 units, where marginal revenue (MR) is $25, and marginal cost (MC) is $40. (a) (i) Write the profit-maximising rule for determining the level of output and price charged by the monopolist. (3 marks) (ii) Explain the economic reasoning for this profit maximisation rule, and evaluate which market structures this rule applied to, and why.

The profit-maximizing quantity for a monopolist that is unregulated will always be(A) where marginal cost and the demand curve cross(B) where price equals marginal cost(C) where marginal revenue equals price(D)where marginal revenue equals zero(E) in the elastic region of the demand curve

1. The table below describes the market situation of a monopolist. The first two columnsdescribe price and quantity as taken from the demand curve the monopolist faces. Thethird column provides the monopolist’s total cost of producing the given quantity.The monopoly may only produce whole units of output (no fractions of Q).Price Quantity Total Cost50 20 54049 21 56548 22 59047 23 61546 24 640a.* What is the profit maximizing quantity for the monopolist? What price will the monopolistcharge? (Hint: Add columns for total revenue, marginal revenue and marginal cost.)b.* What profit will the monopolist make, given your answer to part a.?c. Suppose that instead of the total cost given in the table above, the monopolist had a constantmarginal cost of $28 (and faced the same demand curve). What would be the profitmaximizing quantity for the monopolist?2Use figure 1 at right to answer question 2.Use the letters to describe the areas associatedwith the concepts below. (i.e. rectangle BCFE)There is no price discrimination in this market.2. a.* If this market is a monopoly, what would consumer surplus be?b.* If this market is a monopoly, what would firm profit be?c. If this market is perfectly competitive (in long run equilibrium), whatwould consumer surplus be?d. If this market is perfectly competitive (in long run equilibrium), whatwould firm profit be?e.* If this market is a monopoly, what would the dead weight loss be?3. One approach to regulating monopolies has been to break the monopoly up into smallercomponent firms, as in the case of antitrust actions against the railroads in the early 1900’s.Would you recommend this approach for a natural monopoly? Discuss why or why not.IAC = MCC H$GDemandMRADBQFEFigure 134. Consider the payoff matrix for a two firm game depicted above.a.* What is the optimal outcome for the firm’s profits considered together? (This is the“socially optimal” outcome.)b.* Is there a dominant strategy equilibrium in this game? If so, what is it?c.* Describe how these outcomes relate to the oligopoly pricing problem described in class.Which outcome coincides with “cheating”? Which outcome represents “cooperation”d. If firms play this game, what do you expect will happen? Please briefly explain why.5. Consider the following types of market organization in answering this question:long run perfect competition, long run monopolistic competition, two firm oligopoly(duopoly) which is successfully cooperating and monopoly.a.* Order the firms from smallest to largest long run profit. Please provide a brief explanation.b.* Order the firms from smallest to largest price to the consumer.c. Discuss the efficiency of each type of market organization.Strategy 1Strategy 2B = 30A = 30B = 40A = 0B = 0A = 40B = 10A = 10Firm AFirm BStrategy 2StrategyQuestion 1. a.* What is the profit maximizing quantity for the monopolist? (Hint: Add columns for total revenue, marginal revenue and marginal cost.)Group of answer choicesquantity = 20quantity = 21quantity = 22quantity = 23quantity = 24Question 1. b.*  What profit will the monopolist make, given your answer to part a.?Group of answer choicesprofit = 0profit = 460profit = 464profit = 466profit = 476Question 2. a.* If this market is a monopoly, what would consumer surplus be?Group of answer choicesarea ABEarea ACHarea EFHarea BCFEarea CDGFarea BCHEQuestion 2. b.* If this market is a monopoly, what would firm profit be?Group of answer choicesarea ABEarea ACHarea EFHarea BCFEarea CDGFarea BCHEQuestion 2. e.* If this market is a monopoly, what would the dead weight loss be?Group of answer choicesarea ABEarea ACHarea EFHarea BCFEarea CDGFarea BCHEQuestion 4.a. What is the optimal outcome for the firm’s profits considered together?  (This is the “socially optimal” outcome.)Group of answer choicesFirm A plays strategy 1, firm B plays strategy 1Firm A plays strategy 1, firm B plays strategy 2Firm A plays strategy 2, firm B plays strategy 1Firm A plays strategy 2, firm B plays strategy 2Question 4.b.  Is there a dominant strategy equilibrium in this game? If so, what is it?Group of answer choicesFirm A plays strategy 1, firm B plays strategy 1Firm A plays strategy 1, firm B plays strategy 2Firm A plays strategy 2, firm B plays strategy 1plays strategy 2, firm B plays strategy 2Question 4.c.  Describe how these outcomes relate to the oligopoly pricing problem described in class.Which outcome represents “cooperation”?Group of answer choicesFirm A plays strategy 1, firm B plays strategy 1Firm A plays strategy 1, firm B plays strategy 2Firm A plays strategy 2, firm B plays strategy 1Firm A plays strategy 2, firm B plays strategy 2Question 5.a. Order the firms from smallest to largest long run profit.Group of answer choicesMonopolistic Competition, Monopoly, Perfect Competition, One firm in a cooperating DuopolyPerfect Competition, Monopoly, Monopolistic Competition, One firm in a cooperating DuopolyOne firm in a cooperating Duopoly, Perfect Competition, Monopoly, Monopolistic CompetitionPerfect Competition, Monopolistic Competition, One firm in a cooperating Duopoly, MonopolyQuestion 5.b. Order the firms from smallest to largest price to the consumer.Group of answer choicesMonopolistic Competition, Perfect Competition, Monopoly, One firm in a cooperating DuopolyPerfect Competition, Monopoly, Monopolistic Competition, One firm in a cooperating DuopolyOne firm in a cooperating Duopoly, Perfect Competition, Monopoly, Monopolistic CompetitionPerfect Competition, Monopolistic Competition, One firm in a cooperating Duopoly, Monopoly

Suppose a monopolist faces a market demand curve of the form: P = 122 – 0.2Q. This monopolist has a total cost curve given by: TC = 2Q. If the government were to regulate this monopolist and require them to charge a price equal to average cost, this price would be equal to $_____, and the monopolist would make a profit of $______.Group of answer choices2; 36,000.0; 0.2; 0.61; 17,995.62; 18,000.

The demand function for a monopolist is P = 30 - 0.75Qtotal costs are TC = 20 + 9Q + 0.3Q2Marginal Revenue is MR =30-1.5Qa. What is the profit-maximizing rate of output? (1 Marks)b. What are the profits? (1 Marks)c. What would be the price and output under perfect competition if the monopolist's marginal cost curve is the competitive industry's supply curve? (3 Marks)d. Calculate the amount of the deadweight loss associated with the monopoly outcome. (3 Marks)