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# Problems in market structures

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Discuss problems with market structures, oligopoly, monopoly etc.

https://brainmass.com/economics/output-and-costs/356440

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Please see the attached file. Thanks

Consider a monopoly where the inverse demand for its product is given by P = 50 - 2Q. Total costs for this monopolist are estimated to be C(Q) = 100 + 2Q + Q2. At the profit maximizing combination of output and price, deadweight loss is
A. \$32
B. \$64
C. \$128
D. Cannot be determined with the given information
TR=P*Q=(50-2Q)*Q
MR=dTR/dQ=50-4Q
MC=dC(Q)/dQ=2+2Q
For profit maximization, MR=MC so we have
50-4Q=2+2Q
Solving we get Q=8 and P=34
Instead if the market is competitive, we have P=MC
So 50-2Q=2+2Q, solving we get
Q=12 and P=26
MC when Q=8 is 2+2*8=18
Deadweight Loss = 0.5*(34-26)*(12-8)+0.5*(26-18)*(12-8) = \$32

Which of the following formulas correctly measures the profit of a monopoly?
A. &#960; = TR - TC
B. &#960; = (P - ATC)Q
C. &#960; = (P - AVC)Q
D. &#960; = TR - TC and &#960; = (P-ATC)Q
Answer: D &#960; = TR - TC and &#960; = (P-ATC)Q

Which of the following are not price setting oligopoly models?
A. Stackelberg
B. Cournot
C. Bertrand
D. Stackelberg and Cournot