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Does a monopoly's ability to price discriminate between two groups of consumers depend on its marginal cost curve? Why or why not? Consider two cases
a) the marginal cost is so high that the monopoly is uninterested in selling to one group
b) the marginal cost is low enough that the monopoly wants to sell to both groups
Use diagrams to explain the difference in efficiency in the long run position for a competitive market structure and a monopolistic market structure
Use diagrams to explain first, second and third degree price discrimination
A firm produces 500 units of output. At this production level the firm’s marginal cost of production is £180 and the firm’s total cost of production is £55,500. At this level of production, the firm exhibits increasing or decreasing returns to scale, show your working
A firm has the following information on production and costs from past data:
Output (Y) 0 6 12 18
Total Cost (TC) 9 2775 5361 8199
If the total cost function is known to be
TC =aY3 +bY2 +kY + f , and the demand for the product of the firm is Y = 320 − (1 2)⋅ P answer the following:
• Determine the coefficients of the cubic cost function.
• Derive all cost and revenue curves and the profit function.• Show that the MC cuts the AVC when AVC is at its minimum point. Plot the relevant graph indicating all points.
• Calculate the break even and profit maximizing levels of output and price.
• What is the relationship between price, marginal revenue and own price elasticity of demand at the profit maximization point.
1. Beef supplies are sharply reduced because of drought in the beef-raising states, and consumers turn to pork as substitute beef. Explain with illustrations, the changes in the beef and pork markets
Question 2 Explain the concept of production possibilities frontier (ppf) b. There are seven workers in an Economy. Each worker can make either six tins of milk or
five shirts. Output per worker is independent of the number of workers in the same industry.
i) Draw Draw up a table showing the allocation and various combinations of output available
to this economy.
ii How many tins of milk can this economy produce, if it is willing to forgo shirt? Explain your answer
iii Explain any three ways that this economy can expand its PPF.
Question 3
a. Explain the term price ceiling.
b. Give three effect of price ceiling
c. Given the following demand and price function of milk in the market. Qd -28-4p and Qs = 18 + P respectively.
i. Determine the equilibrium price and quantity of milk
Donald derives utility from only two goods, carrots (X) and donuts (Y). His utility
function is as follows: U(X,Y) =X0.1 Y0.9 . Donald has an income (M) of $900 and the price of carrots (PX) and donuts (PY) are $45 and $90 respectively. Based on this information, What quantities of carrots and donuts will maximize Donald's utility?
In Nyeri town there are only two milk processors. The local inverse demand for milk is given by: Q = 120− P, where P denotes price, Q denotes the total quantity measured in cartons. Both milk processors have the same cost function given by C = 30Q, where C is total cost and Q is output measured in cartons. What is the industry output (Q)?
In Nyeri town there are only two milk processors. The local inverse demand for milk is given by: Q = 120− P, where P denotes price, Q denotes the total quantity measured in cartons. Both milk processors have the same cost function given by C = 30Q, where C is total cost and Q is output measured in cartons. What is the industry output (Q)?
The Kaldor-Hicks-Scitovsky test says that a re-allocation is desirable if two conditions are satisfied. State these conditions and explain each condition by giving examples?
