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Questions tagged [monopoly]

A market structure in which there is a single firm acting as supplier.

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How price is determined in the following monopoly model question?

I am studying microeconomics, and got stuck on the following question, specifically, part (b) and part (c): A monopoly-owned retail store is located next to a monopoly-owned parking lot. (The store ...
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High Fixed Cost and Zero VC

Suppose a Monopoly has a High Fixed Cost= 0.5 and VC=0 . The Profit Max O/t : Q=1 But the Profit = -0.13 (which is < 0) which means -0.13 > -0.5 Should the Firm Produce produce Q=1 or Q=0 ? ...
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A monopolist has decreasing average costs, setting the price equal to AC will lead to?

1)what will happen to the Output compared to the situation where MR=MC ? 2)what will happen to the Output compare to Competitive Output? Attempt at Soln. : 1) 2) so definitely quantity of o/t for ...
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Doubt on Calculation of MR

So this is very beginner level doubt. I know $ MR = \frac{\partial TR}{\partial q} $ . So TR need to be in terms of q to differentiate. This helps us to find Optimal Output level in Monopoly by ...
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perfect price discrimination and allocative efficiency for a monopoly

Maybe I am just confusing myself, but what does charging a different price at every unit have to do with an output level being allocatively efficient? I understand what price discrimination is, I just ...
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What is max here, and how did they derive the first order condition from it?

Hello. Someone sent this on a discord server that I am on, and I couldn't make heads or tails of this. I found the book it is from on studocu; solutions to Cabral's Industrial Organisations, 2nd Ed. ...
andromeda's user avatar
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Question About Non-Discriminating Monopolist - Mathematics for Economists by Simon and Blume Chapter 17 Exercise 7

I am working on Mathematics for Economists by Simon and Blume Exercise 17.7. I know there is an Answers Pamphlet. However, the solution to this question does not make any sense to me. It seems that ...
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Calculating deadweight loss from tax for a monopolist

A monopolist has cost function $c(y) = y$ so that its marginal cost is constant at 1 per unit. It faces the following demand curve $D(p) = \begin{cases} \frac{100}{p}, &\text{if}&p ≤ 20 \\0,&...
thecountofmontecristo's user avatar
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Optimal production plan in monopol

Suppose a monopolist faces the following demand curve: $𝑃(𝑄) = 120 − 3𝑄$, where $𝑄 = 𝑞_1 + 𝑞_2$. The monopolist has two factories. Factory 1 and factory 2 have the following marginal costs: $$ 𝑀...
Fjeeds Arcade's user avatar
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Consumer Surplus Graph

Question: Draw a monopoly graph, with upward sloping marginal cost and on the graph label the area that would be consumer surplus if price were equal to marginal cost, but is producer surplus under ...
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Monopoly markets

A monopoly can produce any output level at a constant marginal (and average) cost of θ per unit. Assume the monopoly sells its goods in two markets separated by some distance. The demand curve in the ...
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Is difficulty for small businesses in an industry seen negatively as approaching monopoly?

I was just curious about fields where it’s hard to break in on a small scale or as a beginner without much expertise. On the one hand, if some organization/entity figured out a way to produce a ...
Julius Hamilton's user avatar
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Monopolies on Giffen Goods

I’m taking an intermediate microeconomics course in college and just got to the topic of monopolies. I know the concept of a Giffen good. As always, Revenue is given by $R= Pq$. Since the monopoly has ...
Nicolas Torres's user avatar
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Show that the marginal cost of the total output equals the marginal cost of individual plant's outputs

Assume that the maxima/minima exists wherever referred (i.e., the necessary secondary conditions are satisfied). $p$ is the inverse-demand, $c_i(q_i)$ are the cost functions of the plants that a ...
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Does profit maximization imply cost minimization in both pure competition and monopoly?

How do I show that profit maximization implies cost minimization (in pure competition)? Suppose we only consider inputs $l,k$ whose prices are $w,r$ and output price $p$. Profit is $\pi = pf(k,l) - wl ...
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How do I find the optimal uniform price for a monopoly?

A monopolist is selling its products in the UK and the EU. The demand for the monopolist's product is Q(UK) = 42 - P and Q(EU) = 16-4P. The cost function of the monopolist is C(Q) = Q^2 where Q = Q(UK)...
econnoob's user avatar
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how does monopolisitic competition make profit in the long run in reality

guys, I have this doubt that if the fast food industry such as KFC, and Maccas are examples of monopolistic competition how are they still making a profit? Because as per the model in long run the ...
studenthere's user avatar
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Profit maximization in a monopoly [closed]

Suppose two goods $1$ and $2$ are produced by a monopolist firm. The market demands are $$q_1(p_1, p_2) = a-p_1+bp_2 \tag{1}$$ $$q_2(p_1, p_2) = a-p_2+bp_1 \tag{2}$$ and the cost functions are $c_i(...
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Are monopolies almost always a creation of government intervention?

In this video by John Stossel the libertarian economist Daniel J. Mitchell states the following: ...
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Duopoly Paradox

In these lectures, the professor shows that in a Cournot Duopoly, firms will supply a total market quantity of identical goods between that of a monopoly and that of a perfect competition, while in a ...
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Do monopolistic firms indirectly increase prices of products sold by perfectly competitive firms?

Correct me if I'm wrong, but this is my understanding: In perfect competition, firms set the price at the marginal cost of production. This gives them a relatively low amount of profit. In ...
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Why does negative derivative of AC with respect to q imply Economies of scale (Monopoly)

In the following Industrial organization exercise form Church and Ware chapter 4 exercise 2 (preliminary info: C(q) = cost function; f = fixed costs; c = marginal costs; q= quantity of goods produced)...
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Schumpeterian Growth paradigm

I'm working on a Schumpeterian R&D growth model, and I assume that the quality gap between a new machine and the replaced one, i.e. $\lambda$ is sufficiently large such that I have drastic ...
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Doesn't it make sense in terms of economic security for tech companies to support unions?

It seems to me looking across (modern) history that the biggest threat to monopoly is government intervention. It certainly seems true in present times when you have many politicians on the left ...
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Why companies choose to make zero economic profits in the long-term when it can maximize it instead? Why does Apple have large profit margins?

I read that companies in the monopolistic competition make zero economic profit in the long term. Why would a company do that when it can maximize the profit instead? My reasoning is that the former ...
Isa's user avatar
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Is P > AC under monopoly?

I would like to know why price is greater than average total cost under monopoly. In textbooks, average cost is drawn under monopoly price. However, if the fixed cost is so large, can monopoly get ...
festakonik's user avatar
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Does marginal revenue actually refer to marginal revenue per time unit?

When I was learning about why marginal revenue is lower than demand, I referred to this derivation: $$\frac{d(TR)}{dQ} = \frac{d(PQ)}{dQ} = \frac{PdQ + QdP}{dQ} = P + Q\frac{dP}{dQ}$$ Wikipedia ...
Joe Z's user avatar
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Does Russia export anything that isn't widely available elsewhere?

Some countries produce items for which there is no easy substitute. For example Taiwan produces 53% of the world's semiconductors. Is there any product(s)/service(s) for which Russia is a monopolist (...
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Is a Monopoly equilibrium also a Nash equilibrium?

Consider a monopoly with price power in the market and the demand is a function of price. Can the result of such a monopoly problem be called a nash equilibrium?
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Book reference for graphs explaining ad valorem and specific taxes

Does anyone know any book in which I can read and see graphs about the ad valorem or specific tax in monopolies or perfect competition? I need a graph like this with the explanation but i can't find ...
Glohelt's user avatar
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How can I compare surplus in monopolistic competition to surplus in monopoly?

Is there any way to compare the total surplus and consumer/producer surplus in monopolistic competition with that of perfect competition or monopoly? All I can come up with is the idea that deadweight ...
Evan's user avatar
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Will there always be excess profit in the Cournot model equilibrium/monopoly

So I'm studying market structures for the end of term, and I'm a bit confused about excess profits. From what I can see, excess profits occur when the demand curve intersects the AC curve - the MR=MC ...
Evan's user avatar
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Plot the dependence of the monopolist’s output (Q) on the price ceiling ($\overline{P}$)

Full task condition: A monopolistic firm’s costs are $TC=\begin{cases} 170+20q, \ q>0 \\ 0 \ q=0 \end{cases}$. There are two groups of consumers of equal size in the monopolist’s market: $Q_{d1} = ...
Foorgy Infifcio's user avatar
2 votes
1 answer
300 views

Price in Second-degree Price Discrimination

In 2nd degree price discrimination, the producer only knows that there are different consumer groups who have different demand curves. He thus adjusts the quantity/quality of the product in a way that ...
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Shouldn't big tech want to split up?

This is a reference request. Where can I find an analysis that explains why companies like Microsoft and Amazon don't split into two. At a certain point diseconomies of scale would kick in. I would ...
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4 answers
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Has monopoly theory incorporated network effects as a source of monopoly?

I studied industrial organization for my Econ. Ph.D. four decades ago. At that time industrial organization had no way to incorporate 'network effects' into monopoly theory. With the advent of social ...
Andrew's user avatar
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Show that slope of MR (marginal revenue) is negative for monopolists

I want to show that the marginal revenue is negative for monopolists. We assume $P(Q)$ is homogenous of degree 1, so it is linear (affine, strictly speaking): $P(Q)=a-bQ$. As we know, $\frac{dP(Q)}{dQ}...
j3141592653589793238's user avatar
3 votes
1 answer
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Comparative statics of a monopoly

Consider a profit maximising monopolist with linear demand Q(P*) and total production cost C(Q(P*)) who faces a per unit tax t. Suppose the slope of marginal cost is decreasing in some parameter, μ. ...
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Demand Function in monopoly [duplicate]

I am studying monopoly and I see that most exercises use inverse demand. why use the inverse demand function instead of the demand function?
Henrique couto's user avatar
1 vote
1 answer
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Why there is no supply on monopoly markets?

We learned in the class that monopoly markets do not have supply curve. Our textbook (Microeconomics and Behavior, page 388 from, R. Frank) says: A monopolist has no supply curve and it explains it ...
WilliamT's user avatar
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3 votes
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Efficiency in a market that is both a monopoly and a monopsony

We know that market power in general leads inefficient outcomes (in terms of Pareto efficiency). This makes instinctive appeal as, for example, a powerful seller who has a lot of market power can ...
Ishan Kashyap Hazarika's user avatar
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2 answers
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Pareto Improvement with Monopolies

This may be one of the more 'elementary' questions on this site.. But I really can't wrap my head around it and a search on the web hasn't yielded much. Given that Pareto efficiency is defined as when ...
shine yang's user avatar
1 vote
1 answer
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Profit-maximization for a monopoly

Between two countries, Richland and Poorland, with a strict ban on cross-border sales agreed with the Poorlandian government. The respective demand functions for both countries are: $Q_{poor} = 10 - ...
rudinsimons12's user avatar
1 vote
1 answer
161 views

Solving problem for optimal price (maximize profit) *attempt inside*

Let a demandfunction be defined as $D(p)=B-bp$, where $b,B>0$. A firm has some production cost, $c$, and can set the price $p$ under the constrain given by the Demand. What is the optimal price? ...
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3 votes
2 answers
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Two part tariff-income effects

I understand that a monopolist optimally sets a two-part tariff by pricing at marginal cost and then extracting CS as a lump sum fee. However, wouldn't the lump sum fee induce a decrease in consumer ...
TariffMan's user avatar
-4 votes
2 answers
70 views

Is there a qualitative difference between the rent derived from a supply fixed by nature and single supplier required to supply a fixed quantity?

The assumption are that supply is absolutely and permanently fixed at q average and marginal costs are zero demand always exceeds supply (P ≥ 0) The graph should look the same in both cases: a ...
sba222's user avatar
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Are urban land (location) markets considered competitive even though the market price does not equal marginal cost (zero)?

Urban land (location) supply is fixed and the marginal cost of bringing an urban plot into production is zero. Even when land owners do not collude to limit the supply, the fixed supply arguably ...
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What has been the reception of Posner & Weyl’s claim that property rights lead to market power?

Posner & Weyl claim that property rights lead to monopoly rents: Property Is Only Another Name for Monopoly Radical Markets Have their claims been elaborated, tested, or peer-reviewed? In ...
sba222's user avatar
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2 votes
1 answer
404 views

Monopoly: Demand Curve and Marginal Revenue Curve Intercepts

I'm doing an introductory economics course, having never done economics before. In our topics, we covered monopoly and the principle that the marginal revenue slope is twice that of the demand slope. ...
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1 answer
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Monopsony theory of Single Payer

One theory of how single payer/universal healthcare systems are less expensive than the US private insurance market is that each country functions as a monopsony: a market structure in which a single ...
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