A monopoly firm has a total fixed cost of Rs 100 and has the following demand schedule:
Quantity |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
10 |
Marginal Revenue |
100 |
90 |
80 |
70 |
60 |
50 |
40 |
30 |
20 |
10 |
Find the short run equilibrium quantity, price and total profit. What would be the equilibrium in the long run? In case the total cost is Rs.1000, describe the equilibrium in the short run and in the long run.
Quantity |
Price (P) (Rs) |
TR = (P*Q) (Rs) |
1 |
100 |
100 |
2 |
90 |
180 |
3 |
80 |
240 |
4 |
70 |
280 |
5 |
60 |
300 |
6 |
50 |
300 |
7 |
40 |
280 |
8 |
30 |
240 |
9 |
20 |
180 |
10 |
10 |
100 |
As the full cost of the monopolist firm is zero, the income can be the maximum in which TR is the maximum. That is, on the sixth unit of output the firm might be maximizing its profit and the fast run equilibrium price might be Rs 50.
income of the firm = three hundred
quick run equilibrium charge = Rs 50
profit = TR - TC
= 300 - 0
income = Rs 300
If the whole price is Rs one thousand , then the equilibrium may be at a point in which the distinction among TR and TC is the most.
TR is the maximum on the 6 th level of output.
So earnings = 300 – 1000 = - seven-hundred
So, the company is earning losses and now not earnings. as the monopolist company is incurring losses inside the short run, it'll stop its production in the long run.
List the three different ways in which oligopoly firms may have.
Will the monopolist firm continue to produce in the short run if a loss is incurred at the best short run level of output?
Comment on the shape of MR curve in case when TR curve is a
(a) Positively sloped straight line
(b) Horizontal straight line
If duo poly behavior is one that is described by Cornet, the market demand curve is given by the equation q = 200 - 4p and both the firms have zero costs, find the quantity supplied by each firm in equilibrium and the equilibrium market price.
From the schedule provided below calculate the total revenue, demand curve and the price elasticity of demand:
Quantity |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
9 |
Marginal Revenue |
10 |
6 |
2 |
2 |
2 |
0 |
0 |
0 |
- |
What is meant by prices being rigid? How can oligopoly behavior lead to such an outcome?
What would be the shape of the demand curve so that the total revenue curve is?
(a) A positively sloped straight line passing through the origin?
(b) A horizontal line?
If the monopolist firm of Exercise 3 was a public sector firm. The government set a rule for its manager to accept the government fixed price as given (i.e. to be a price taker and therefore behave as a firm in a perfectly competitive market). And the government has decided to set the price so that demand and supply in the market are equal. What would be the equilibrium price, quantity and profit in this case?
The market demand curve for a commodity and the total cost for a monopoly firm producing the commodity are given in the schedules below.
Quantity |
0 |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
Price |
52 |
44 |
37 |
31 |
26 |
22 |
19 |
16 |
13 |
Quantity |
0 |
1 |
2 |
3 |
4 |
5 |
6 |
7 |
8 |
Price |
10 |
60 |
90 |
100 |
102 |
105 |
109 |
115 |
125 |
Use the information given to calculate the following:
(a) The MIR and MC schedules
(b) The quantities for which MIR and MC are equal
(c) The equilibrium quantity of output and the equilibrium price of the commodity
(d) The total revenue, total cost and total profit in the equilibrium
Explain why the demand curve facing a firm under monopolistic competition is negatively sloped.
Explain the concept of a production function
Explain market equilibrium.
Discuss the central problems of an economy.
What are the characteristics of a perfectly competitive market?
What do you mean by the budget set of a consumer?
What is the total product of input?
When do we say that there is an excess demand for a commodity in the market?
What do you mean by the production possibilities of an economy?
How are the total revenue of a firm, market price, and the quantity sold by the firm related to each other?
What is budget line?
Distinguish between microeconomics and macroeconomics.
Suppose there are 20 consumers for a good and they have identical demand functions:
d(p)=10–3pd(p)=10–3p for any price less than or equal to 103103 and d1(p)=0d1(p)=0 at any price greater than 103.
What do you understand by positive economic analysis?
What does the average fixed cost curve look like? Why does it look so?
Can there be a positive level of output that a profit-maximising firm produces in a competitive market at which market price is not equal to marginal cost? Give an explanation.
Why is the total revenue curve of a price-taking firm an upward-sloping straight line? Why does the curve pass through the origin?
Explain through a diagram the effect of a rightward shift of both the demand and supply curves on equilibrium price and quantity.
Discuss the central problems of an economy.
A firm earns a revenue of Rs 50 when the market price of a good is Rs 10. The market price increases to Rs 15 and the firm now earns a revenue of Rs 150. What is the price elasticity of the firm’s supply curve?
A shift in demand curve has a larger effect on price and smaller effect on quantity when the number of firms is fixed compared to the situation when free entry and exits is permitted. Explain.