help me do micro economics? please?

Question

question1: assume a monopolist operates in a marlet with demand dunction p=100-4q. Marginal cost =4 no matter how many units are produced.
(a) what price will maximise the sum of producer and consumer surplus in this market?
(b) what is the price set by the monopolist?
(c) what is the loss in consumer surplus resulting from monopoly? Illustrate graphically.
(d) why is the monopoly outcome inefficient?

also explain how you get to your answer.

Answer 1

The basic stuff you need to know are:
1 Equilibrium is MC=MR, (and MC is rising)
less output means MR>MC so producing more would increase profit
more output means MC>MR, you are losing by producing the last unit.

2 How to get MC and MR and so on.
You have Demand=AR=100-4q.
Therefore TR=AR*q=(100-4q)*q=100q-4q^2.
MR is how much TR changes as q changes, that is the derivative:
MR= dTR/dq=100-8q.

MC is given to be 4,
so TVC = 4q is the Supply curve.

You are in business...

a) Max of CS and PS is where DD=SS,
so 100-4q=4q
q=12.5

b) Monopolist maximises profits where MC=MR
so 4=100-8q
8q=96
q=12.
To get price, inut into DD:
p=100-4q
p=52.

c) Loss in CS, sorry I don't know how to input graohs here,
but if you draw DD, SS as well as MC and MR by the equations above,
then the optimun CS+PS is the triangle from (0,0) to DD=SS point to (0,100).
The area is of size .5*100*12.5=625
(CS=.5*50*12.5=312.5=PS)

Now to get the monopolistic CS+PS,
where MC=MR is the output, the price is the projection vertically onto DD,
CS=area of DD above price = .5*(100-52)*12=288.
PS=area of parallelogram under CS triangle and above MC
PS=.5*(4+52)*12=336
(Draw the diagrams and you will see it clearly)

d) Inefficient because total of PS and CS under monopoly is lower than under 'competition'.
Basically as CS falls by 312.5-288=24.5,
PS goes up bby 336-312.5=23.5,
you have a loss of 1 due to inefficiency.

Answer 2

Your own definition of macro economics does not license the government to spend more money than it has, or is projected to ever have. The Keynesian argument is that the government (Macro) could make money available by manipulating securities. Well, isn't that what got us into the mess we're in now? The Keynesian argument also held that the rate of interest was primarily a monetary phenomenon - and one moreover detached from the real factors of thrift and the productivity of capital to which the neoclassical mind had linked it This position further implied that the rate of interest could no longer be invoked as the delicate mechanism for equilibrating intended saving and intended investment. This is precisely the conundrum we're in now. We are trying to forecast an economy with artificial interest rates. Keynes is widely accepted? LOL. Particularly now, after being treated to the Keynes method by Fannie, Freddie, Indy, Barney Frank, Frank Raines, Maxine Waters, Chris Dodd etal, Keynes is invoked as a pejorative rather than a sound economic method. Stop kidding yourself.

Answer 3

price is given by marginal cost=marginal revenue
total revenue= quantity*price=q*(100-4q)=100q-4q^2

marginal revenue is the derivative of TR wrt q
= 100-8q

the quantity produced by the monopoly
100-8q=4
q=12

and price charged
p=100-4*12=52

to finish the question you just need to calculate perfect competition equilibrium values

Answer 4

tu tu tut cheating