Exam 24: Monopoly Behavior-Part A

A profit-maximizing monopolist is able to practice third-degree price discrimination.If he charges p₁ in market 1 and p₂ in market 2, where p₁ > p₂, the quantity sold in market 1 must be smaller than the quantity sold in market 2.

Wobble's Weebles is the only producer of weebles.It makes weebles at constant marginal cost c(where c > 0)and sells them at a price of p₁ per weeble in market 1 and at a price of p₂ per weeble in market 2.The demand curve for weebles in market 1 has a constant price elasticity of demand equal to -2.The demand curve for weebles in market 2 has a constant price elasticity equal to -3/2.The ratio of the profit-maximizing price in market 1 to the profit-maximizing price in market 2 is

A monopolist sells in two markets.The demand curve for her product is given by p₁ = 141 - 3x₁ in the first market and p₂ = 115 - 2x₂ in the second market, where x_i is the quantity sold in market i and p_i is the price charged in market i.She has a constant marginal cost of production, c = 3, and no fixed costs.She can charge different prices in the two markets.What is the profit-maximizing combination of quantities for this monopolist?

A monopolist has discovered that the inverse demand function of a person with income M for the monopolist's product is p = .002 M -0 q.The monopolist is able to observe the incomes of its consumers and to practice price discrimination according to income (second-degree price discrimination).The monopolist has a total cost function, c(q)= 100q.The price it will charge a consumer depends on the consumer's income, M, according to the formula

Roach Motors has a monopoly on used cars in Enigma, Ohio.By installing secret microphones in the showroom, the friendly salespersons at Roach are able to learn each customer's willingness to pay and can therefore practice first-degree price discrimination, extracting from each customer his entire consumer's surplus.The inverse demand function for cars in Enigma is P = 2,000 - 10Q.Roach Motors purchases its stock of used cars at an auction in Cleveland for $500 each.Roach motors will

A monopolist is able to practice third-degree price discrimination between two markets.The demand function in the first market is q = 500 - 2p and the demand function in the second market is q = 1,500 - 6p.To maximize his profits, he should

A price-discriminating monopolist sells in two separate markets such that goods sold in one market are never resold in the other.It charges p₁ = $2 in one market and p₂ = $8 in the other market.At these prices, the price elasticity in the first market is -2.20 and the price elasticity in the second market is -0.10.Which of the following actions is sure to raise the monopolist's profits?

A price-discriminating monopolist sells in two separate markets such that goods sold in one market are never resold in the other.It charges p₁ = $4 in one market and p₂ = $8 in the other market.At these prices, the price elasticity in the first market is -1.90 and the price elasticity in the second market is 20.30.Which of the following actions is sure to raise the monopolist's profits?

A monopolist has a constant marginal cost of $2 per unit and no fixed costs.He faces separate markets in the United States and England.He can set one price p₁ for the U.S.market and another price p₂ for the English market.If demand in the United States is given by Q₁ = 7,000 - 700p₁ and demand in England is given by Q₂ = 3,200 - 400p₂, then the price in the United States will

A monopolist who is able to practice third-degree price discrimination will make greater profits than a monopolist who is able to practice first-degree price discrimination.

A price-discriminating monopolist sells in two separate markets such that goods sold in one market are never resold in the other.It charges p₁ = $5 in one market and p₂ = $10 in the other market.At these prices, the price elasticity in the first market is -1.40 and the price elasticity in the second market is -0.10.Which of the following actions is sure to raise the monopolist's profits?

A monopolist has a constant marginal cost of $2 per unit and no fixed costs.He faces separate markets in the United States and England.He can set one price p₁ for the U.S.market and another price p₂ for the English market.If demand in the United States is given by Q₁ = 6,000 - 600p₁ and demand in England is given by Q₂ = 2,400 - 400p₂, then the price in the United States will

Disneyland has two possibilities for pricing rides at its theme parks: (1)Set MR = MC for each ride and charge the maximum price consumers will bear.(2)Charge an admission fee to the theme park but allow unlimited rides for free.Using graphs, show which pricing scheme is more profitable for Disneyland.

A monopolist has a constant marginal cost of $2 per unit and no fixed costs.He faces separate markets in the United States and England.He can set one price p₁ for the U.S.market and another price p₂ for the English market.If demand in the United States is given by Q₁ = 7,000 - 700p₁ and demand in England is given by Q₂ = 1,200 - 200p₂, then the price in the United States will

A careful analysis of demand for Bubbles in Strasburg, North Dakota, reveals a strange segmentation in the market.(Recall Bubbles is the beverage which produces an unexplained craving for Lawrence Welk's music.It is produced by the process Q = min{R/3, W }, where R is the number of pulverized Lawrence Welk records and W is gallons of North Dakota well water.P_R = $1, P_W = $5.)If demand for Bubbles by senior citizens is described by Q₀ = 500P^-3/2while demand by those under 65 years old is Q_y=50P^-5, how should Bubbles be priced to maximize profits?

A careful analysis of demand for Bubbles in Strasburg, North Dakota, reveals a strange segmentation in the market.(Recall Bubbles is the beverage which produces an unexplained craving for Lawrence Welk's music.It is produced by the process Q =min{R/4, W}, where R is the number of pulverized Lawrence Welk records and W is gallons of North Dakota well water.P_R = $1, P_W = $4.)If demand for Bubbles by senior citizens is described by Q₀ = 500P^-3/2 while demand by those under 65 years old is Q_y = 50P^-4, how should Bubbles be priced to maximize profits?

Roach Motors has a monopoly on used cars in Enigma, Ohio.By installing secret microphones in the showroom, the friendly salespersons at Roach are able to learn each customer's willingness to pay and can therefore practice first-degree price discrimination, extracting from each customer his entire consumer's surplus.The inverse demand function for cars in Enigma is P = 2,000 - 10Q.Roach Motors purchases its stock of used cars at an auction in Cleveland for $600 each.Roach motors will

Miron Floren, of Lawrence Welk Show fame, now tours the country performing at accordion concerts.A careful analysis of demand for tickets to Mr.Floren's concerts reveals a strange segmentation in the market.Demand for tickets by senior citizens is described by Q₀= 500P^-3/2 while demand by those under 65 years old is Q_y = 50P^-4.If the marginal cost of a ticket is $3, how should tickets to Mr.Floren's concerts be priced to maximize profits?

A monopolist sells in two markets.The demand curve for her product is given by p₁ = 165 - 3x₁ in the first market and p₂ = 233 - 4x₂ in the second market, where x_i is the quantity sold in market i and p_i is the price charged in market i.She has a constant marginal cost of production, c = 9, and no fixed costs.She can charge different prices in the two markets.What is the profit-maximizing combination of quantities for this monopolist?

A monopolist finds that a person's demand for its product depends on the person's age.The inverse demand function of someone of age y can be written p = A(y)- q, where A(y)is an increasing function of y.The product cannot be resold from one buyer to another and the monopolist knows the ages of its consumers.If the monopolist maximizes its profits,