Author Question: A monopolistic firm operates in two separate markets. No trade is possible between market A and ... (Read 60 times)

jake

  • Hero Member
  • *****
  • Posts: 538
A monopolistic firm operates in two separate markets. No trade is possible between market A and market B. The firm has calculated the demand functions for each market as follows:
 
  Market A p = 15 - Q; Market B p = 11 - Q
 
  The company estimates its total cost function to be TC = 4Q. Calculate:
  a. quantity, total revenue and profit when the company maximizes its profit and charges the same price in both markets
  b. quantity, total revenue and profit when the company charges different prices in each market and maximizes its total profit

Question 2

Because the labor supply curve for a monopsonist is upward sloping, the monopsonist
 
  A) hires zero units of labor.
  B) chooses the perfectly competitive quantity of labor.
  C) must increase the wage to attract more units of labor.
  D) must take the wage as given by the market.



itsakadoozi

  • Sr. Member
  • ****
  • Posts: 317
Answer to Question 1

If revenue and cost schedules are calculated:
a. Q = 9; p = 8.5; TR = 76.5; TC = 36; profit = 40.5
b. Market A:
Q = 5 to 6; p = 9 to 10; TR = 50 to 54; TC = 20 to 24; profit = 30
Market B:
Q = 3 to 4; p = 7 to 8; TR = 24 to 28; TC = 12 to 16; profit = 12
Combined profit = 42

If equations are used:
a. Q = 9; p = 8.5; TR = 76.5; TC = 36; profit = 40.5
b. Market A:
Q = 5.5; p = 9.5; TR = 52.25; TC = 22; profit = 30.25
Market B:
Q = 3.5; p = 7.5; TR = 26.25; TC = 14; profit = 12.25
Combined profit = 42.5

Answer to Question 2

C



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question


 

Did you know?

There are more sensory neurons in the tongue than in any other part of the body.

Did you know?

Walt Disney helped combat malaria by making an animated film in 1943 called The Winged Scourge. This short film starred the seven dwarfs and taught children that mosquitos transmit malaria, which is a very bad disease. It advocated the killing of mosquitos to stop the disease.

Did you know?

Parkinson's disease is both chronic and progressive. This means that it persists over a long period of time and that its symptoms grow worse over time.

Did you know?

Pubic lice (crabs) are usually spread through sexual contact. You cannot catch them by using a public toilet.

Did you know?

Despite claims by manufacturers, the supplement known as Ginkgo biloba was shown in a study of more than 3,000 participants to be ineffective in reducing development of dementia and Alzheimer’s disease in older people.

For a complete list of videos, visit our video library