# In market A, a firm with market power faces an inverse demand curve of P = 10 - Q and a marginal...

## Question:

In market A, a firm with market power faces an inverse demand curve of P = 10 - Q and a marginal cost that is constant at $2. In market B, a firm with market power faces an inverse demand curve of P = 8 - 0.75Q and a marginal cost of $2. Producer surplus in market A is {eq}\_\_\_\_\_\_\_\_\_ {/eq} than in market B.

A) $8 higher

B) $4 higher

C) $2 lower

D) $1 lower

Show your complete solution.

## Producer Surplus

Producer surplus is the amount of surplus benefit earned by the producer. The producers earn surplus above their marginal cost, but below the market price, depending upon the quantity sold. The producer surplus is higher as compared to other markets in monopoly.

## Answer and Explanation: 1

Become a Study.com member to unlock this answer! Create your account

View this answer

** A) $8 higher**

Equilibrium in market A:

{eq}\begin{align*} P &= 10 - Q\\ TR &= 10Q - {Q^2}\\ MR &= 10 - 2Q\\ MR &= MC\\ 10 - 2Q &= 2\\ Q &=...

See full answer below.

#### Ask a question

Our experts can answer your tough homework and study questions.

Ask a question Ask a question#### Search Answers

#### Learn more about this topic:

from

Chapter 3 / Lesson 61Learn the producer surplus definition and understand how to calculate it with the producer surplus formula. See how a profit is made with a producer surplus example.

#### Related to this Question

- A duopoly faces an inverse demand function of P = 120 - Q. Both firms have a constant marginal cost of 20. A. Calculate the output of each firm, the market output, and price in a collusive equilibrium. B. Calculate the output of each firm, the market outp
- A firm with market power has the inverse demand curve P = 90 - 1.5Q and the marginal cost curve MC = 10 + Q. If the firm decides to practice perfect price discrimination, its producer surplus will: a
- Cournot duopolists face a market demand curve given by P = 190 - 2Q where Q is total market demand. Each firm can produce output at a constant marginal cost of 10 per unit. Find the equilibrium pric
- You are the economist of a firm with market power. The inverse demand for your product is given by P= 200 -10Q and your marginal cost is 5 + Q. a. What is the profit-maximizing level of output? b.
- A duopoly faces a market demand of p = 120 - Q. Firm 1 has a constant marginal cost of MC1 = 20. Firm 2's constant marginal cost is MC2 = 40. Calculate the output of each firm, market output, and price if there is (a) a collusive equilibrium or (b) a Cour
- Consider an oligopolistic market with 2 firms and a demand curve given by P A/Q, for P the market price and Q the market demand. Each firm has a constant marginal cost of production equal to $c per un
- A firm with market power has an inverse demand curve of P = 450 - 5Q and the marginal cost of MC = 400, where Q is measured in thousands. What is the deadweight loss from market power at the firm's profit-maximizing output level? a. $280,000 b. $9,400
- A monopolist faces a demand curve given by P = 40 - Q, where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $2. There are no fixed costs of production. To answer the following questio
- A monopolist faces a demand curve given by: P = 200 - 10Q, where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $60. There ar
- A monopolist faces a demand curve given by P = 40 - Q where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $2. There are no f
- A monopsony faces a supply curve of p = 10 + Q. What is its marginal expenditure curve? If the monopsony has a demand curve of p = 50 - Q, what are the equilibrium quantity and price? How does this eq
- A monopolist faces a demand curve given by P = 40 - Q, where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $2. There are no fixed costs of production. How much output should the mono
- A monopolist faces a demand curve given by P=70-2Q, where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $6. There are no fixed
- There are 100 identical firms in a perfectly competitive industry. Market demand is given by Q = -200P + 8000. Each firm has a marginal cost curve of MC = 0.4Q + 4. a. What is the firm's supply curve? What is market supply? b. What is the equilibrium pric
- A monopolist faces a demand curve given by P = 40 - Q where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $2. There are no fixed costs of production. Hint: Drawing a graph co
- A monopolist faces a demand curve given by P = 40 - Q where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $2. There are no fixed costs of production. Hint: Drawing a graph could
- A monopolist faces a demand curve given by P = 40 - Q where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $2. There are no fixed costs of production. Hint: Drawing a graph could b
- A monopolist faces a demand curve given by P = 40 - Q where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $2. There are no fixed costs of production. Hint: Drawing a graph coul
- A monopolist faces a demand curve given by P = 40 - Q where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $2. There are no fixed costs of production. Hint: Drawing a graph could be
- A monopolist faces a demand curve given by P = 40 - Q where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $2. There are no fixed costs of production. Hint: Drawing a graph
- A monopolist faces a demand curve given by P = 70 - 2Q where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $6. There are no fixed costs of production. A. What quantity should the mo
- A monopolist faces a demand curve given by P = 220 - 3Q, where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $40. There are no fixed costs of production. a. What quantity should the
- Suppose two firms, each with constant marginal and average cost 41 per unit, supply a market where the equation of the inverse demand curve is p = 80 - Q = 80 - (q1 + q2). Find Cournot duopoly equilibrium consumer s surplus for this market.
- Two firms compete in a market to sell a homogeneous product with inverse demand function P = 600 - 3Q. Each firm produces at a constant marginal cost of $300 and has no fixed costs. Use this informati
- Cournot duopolists face a market demand curve given by P=90-Q where Q is total market demand. Each firm can produce output at a constant marginal cost of 30 per unit. What are the Cournot equilibrium
- Suppose a single-price monopolist with TC = 20Q faces an inverse demand curve P = 120 - Q and marginal revenue curve MR = 120 - 2Q, where Q is output per period. a. What is the marginal cost (MC) for the firm? What is the average cost (AC) for the firm? I
- Firm B is a monopolist that faces market demand of Q = 200 - 2P. Firm B's total cost is given by TC(Q) = 2Q^2 + 20Q + 200. What. Firm B's profit maximizing output level (Q') (Hint: inverse demand is
- A monopolist faces a demand curve given by P = 210 - 5Q where P is the price of the good and Q is quantity demanded. The marginal cost of production is constant and is equal to $60. There are no fixed
- If a firm with pricing power in the market faces a demand curve of P = 1800 - 2Q and marginal costs of MC = 200, how much is the equilibrium (profit maximizing) price (P)?
- A firm with market power has an inverse demand curve of P = 450 - 5Q and marginal cost of MC = 40Q, where Q is measured in thousands. What is the deadweight loss from market power at the firms profit
- Suppose two firms, each with constant marginal and average cost 41 per unit, supply a market where the equation of the inverse demand curve is p = 80 - Q = 80 - (q1 + q2). Find Cournot duopoly equilibrium price for this market.
- If a firm has no market power, the firm's: a. demand curve will be perfectly inelastic. b. ATC curve will be below the AVC curve. c. demand curve and marginal revenue curve will be the same. d. price cannot exceed the ATC.
- The inverse demand a monopoly faces is p = 100-Q+A0.5, where Q is quantity, p is the price, and A is its level of advertising. Its marginal cost of production is constant at $10 (no fixed cost), and i
- Consider a monopolist with the cost function C(Q) = 10Q and a corresponding marginal cost of MC(Q) = 10. The market demand is Q = 40 - 2P, which gives a marginal revenue of MR(Q) = 20 - Q. a. Write out the firm's inverse demand curve. b. Draw the (inverse
- A monopolist faces a demand curve given by P = 220 - 3Q, where P is the price of the good, and Q is the quantity demanded. The marginal cost of production is constant and is equal to $40. There are no fixed costs of production.
- Suppose a single price monopolist with TC=20Q faces an inverse demand curve P=120-Q and marginal revenue curve MR=120-2Q, where Q is output per period. a) What is the marginal cost (MC) for the firm?
- If a firm with pricing power in the market faces a demand curve of P = 1800 - 2Q and marginal costs of MC = 200, how much is the equilibrium (profit-maximizing) quantity?
- Suppose two firms, each with constant marginal and average cost 41 per unit, supply a market where the equation of the inverse demand curve is p = 80 - Q = 80 - (q1 + q2). Find Cournot duopoly equilibrium profit per firm for this market.
- Suppose your firm faces a demand curve of (P = 90 - 0.30Q) and the marginal cost of production is $10/unit. Find the profit-maximizing output and price. Is this outcome on the elastic, inelastic, or unitary elastic part of the demand curve? What are your
- A monopsony buyer's demand curve is P = 100 - 0.6Q. The supply curve it faces is P = 20 + 0.5Q. a. What is the monopsony's marginal expenditure (ME) curve? b. What is the monopsony's marginal value (MV) curve? c. Graph the firm's ME, AE, and demand curve.
- The inverse demand curve that a monopoly faces is p = 78 - 4Q. The firm's cost curve is C(Q) = 228 + 2Q(squared) + 6Q, so that MC = 4Q + 6. a. Derive the marginal revenue for the monopolist. b. What i
- Suppose two firms, each with constant marginal and average cost 41 per unit, supply a market where the equation of the inverse demand curve is p = 80 - Q = 80 - (q1 + q2). Find Cournot duopoly equilibrium output for this market.
- A monopoly firm faces an (inverse) demand curve of P = 196 - 28Q^0.5 + Q and has a constant marginal (and average) cost curve of 49. If the firm can perfectly price discriminate, what are its profits;
- There are two identical firms in a market with an inverse demand curve P = 1 - (ql + q2) and the marginal cost of production is equal to c for each firm. Compute the Cournot equilibrium (quantities,
- A monopolist faces a demand curve given by P=220-3Q, where P is the price of the good, and Q is the quantity demanded. The marginal cost of production is constant and is equal to $40. There are no fixed costs for productions. What quantity should the mono
- Let the inverse demand curve be p(q)=a-bq. Suppose there are two firms, with constant marginal cost equal to C. Now suppose that the two firm engage in price competition (set p) instead of quantity co
- A monopolist faces a demand curve P = 50 - 5Q where P is the product price and Q is the output. The monopolists cost function is C(Q) = 10Q. What are the monopolist's profit maximizing price, output, and profit? What are the consumer surplus and dead-weig
- A monopolist can produce its output at a constant average and constant marginal cost of ATC = MC = 5. The monopoly faces a demand curve given by the function Q = 53 - P and a marginal revenue curve that is given by MR = 53 - 2Q. a. Draw the firm's demand
- A monopolist faces a demand curve given by: P = 200 - 10Q, where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $60. There are no fixed costs of production. a. What quantity should th
- The inverse demand curve for a monopolist changes from P 200 025 Q t o P 180 0.25 Q ,while the marginal cost of production remains unchanged at a constant $90. What happens to the profit maximizing
- The monopolist faces a demand curve given by D(p)=100-2p. Its cost function is c(y)=2y. What is its optimal level of output and price? If the demand curve facing the monopolist has a constant elastici
- A two-firm cartel that produces at a constant marginal cost of $20 faces a market inverse demand curve of P = 100 - 0.50Q. Initially, both firms agree to act like a monopolist, each producing 40 unit
- Suppose that the inverse demand curve for paper is p = 200 - Q, the private marginal cost (unregulated competitive market supply) is MC^p = 80 + Q, and the marginal harm from gunk is MC^g = Q. a. Wha
- If the inverse demand cure is P(Q)=10-Q and the marginal cost is constant at 4, what is the profit maximizing monopoly price and output? What is the price elasticity at the monopoly price and output?
- A monopolist faces a demand curve given by P = 10 - Q and has constant marginal (and average cost) of 2. What is the output and the price that maximizes profit for the monopolist? A) Q = 0, P = 10 B) Q = 2, P = 8 C) Q = 4, P = 6 D) Q = 8, P = 2 E) None of
- A monopolist faces a demand curve given by P = 10 - Q and has constant marginal (and average cost) of 2. What is the output and the price that maximizes profit for this monopolist? (a) Q = 0, P = 10. (b) Q = 2, P = 8. (c) Q = 4, P = 6. (d) Q = 8, P = 2. (
- Consider a market for a homogeneous product with demand given by Q = 37.5 - 0.25 P. There are two firms, each with a constant marginal cost equal to 40. a. Determine the output and price under a Cournot equilibrium. b. Determine the output and price under
- If a firm with monopoly pricing power in the market faces a demand curve of P = 4,000 - 2Q and marginal costs of MC = 1,000 + 2Q, then the firm will produce: A. 150 units. B. 500 units. C. 200 units. D. 350 units.
- Suppose that a monopolist faces the demand curve P(Q) = 40 - Q, and has total cost curve TC(Q) = F + 3/2 Q^2, where F is a fixed cost. A) What would be the producer surplus in the market? B) What is t
- If a firm with pricing power in the market faces a demand curve of P = 1800 - 2Q and marginal costs of MC = 200, how much is the consumer surplus or net consumer value?
- Suppose a single price monopolist with TC = 20Q faces an inverse demand curve P = 120 - Q and marginal revenue curve MR = 120 - 2Q, where Q is output per period. (a) What is the marginal cost (MC) f
- The inverse demand curve a monopoly faces is P = 100 - Q. The firm's cost curve is C(Q) = 10 + 5Q. A) What is the profit-maximizing solution? B) What is the profit-maximizing quantity? C) What is the profit-maximizing price? D) What is the firm's economic
- Two identical firms make up an industry in which the market demand curve is represented by P = 1,250 - 0.25 Q, where Q is the quantity demanded and P is the price per unit. The marginal revenue curve is given by MR = 1,250 - 0.5 Q. The marginal cost of pr
- Suppose the demand curve for widgets is given by P = 100 - Q, where P is the price and Q is the quantity. a. If the market is served by a single monopolist with constant marginal cost of MC1 = $80, what is its incentive (or additional profit) from develop
- The price searcher's marginal revenue curve lies below the demand curve because: a. the monopoly is not an efficient producer. b. as the monopolist increases output, the price falls. c. there is no account of implicit costs. d. the monopolist's demand cur
- A monopolist faces a market demand curve given by: Q = 70 - P. This monopolist charges a single price for its output. If the monopolist can produce at constant average and marginal costs of AC = MC =
- Suppose that the market demand curve for bean sprouts is given by P = 820 - 2Q, where P is the price and Q is the total industry output. Suppose that the industry has two firms, a Stackelberg leader and a follower. Each firm has a constant marginal cost o
- In a perfectly competitive market, market demand is given by P = 81 - 2 Q , and market supply P = 6 Q + 1 . Each firm has short-run marginal cost M C = 120 Q + 1 , and short-run average total cost of A T C = 60 Q + 3.75 ; Q + 1. A T C for each firm is
- The inverse demand curve a monopoly faces is p = 130 - Q. The firm's cost curve is C(Q) = 20 + 5Q. a. What is the profit-maximizing solution? b. What is the firm's economic profit?
- A firm with market power faces a demand curve PD = 75 - 0.7Q, and its cost function is TC = 348 + 12Q - 1.28Q2 + 0.062Q3. What is the firm's profit-maximizing output to the nearest $0.10?
- A monopolist faces market demand given by Q_D = 65 - P and cost of production given by C = 0.5Q^2 + 5Q + 300. A. Calculate the monopolist's profit-maximizing output and price. B. Graph the monopolist's demand, marginal revenue, and marginal cost curves. S
- The inverse demand curve for a monopolist changes from P = 200 - 0.25Q to P = 180 - 0.25Q, while the marginal cost of production remains unchanged at a constant $90. After the change in the demand curve, the price falls and the output falls by: a. $40; 20
- Given the inverse demand function: P = 15 - 0.025X, where X is the total quantity demanded: There are two firms in the market, each with a constant marginal cost of RM7.50. Find the outcome for: a) C
- If market demand is P = 100 - Q and the firm has a constant marginal cost of 20, then with first-degree price discrimination, what will be the firm's producer surplus? A) $800. B) $1,600. C) $2,400. D
- The demand curve facing a monopolist is: a) identical to the marginal cost curve. b) downward sloping and above the marginal revenue curve. c) downward sloping and below the marginal revenue curve. d) horizontal at the market price.
- The inverse demand for a product is P(Q) = 100 - (1 / 2)Q. Production is associated with a marginal private cost, MCP(Q) = Q, and a constant marginal external cost, MCE = 25. (a) Graph inverse demand, marginal revenue, marginal private cost, and marginal
- In the dominant firm model of oligopoly, A. the marginal revenue curve has a gap. B. the demand curve facing the dominant firm is the same as the demand curve of the entire market. C. the demand curve facing the dominant firm equals the demand curve of th
- Suppose your firm faces a demand curve of P = 90 - 0.30Q and the marginal cost of production is $10 per unit. 1. Find the profit-maximizing output and price. 2. Is this outcome on the elastic, inelastic, or unitary elastic part of the demand curve?
- Suppose a firm faces the inverse demand curve P=100-Q. Marginal cost is constant at $10. a. Calculate producer surplus and the deadweight loss under monopoly pricing. b. Suppose the firm uses block pr
- The demand curve that a monopoly faces is Q_D = 787 - 8P. Rearranging this yields the inverse demand curve P = \frac {787}{8} - \frac{Q_D}{8}. The marginal revenue curve is MR = P = \frac{787}{8} - \frac{2Q_D}{8}. There are no fixed costs for the mono
- A natural monopoly has a constant marginal cost of $10, and faces the following inverse demand function: P = 27 - 1.5 Q Assume the firm is unregulated and profit maximizing. a. What is the profit maximizing price and quantity that it would choose? b. What
- Two firms are producing identical goods in a market characterized by the inverse demand curve P = 60 - 2Q, where Q is the sum of Firm 1's and Firm 2's output, q1 + q2. Each firm's marginal cost is constant at $12, and fixed costs are zero. Answer the foll
- Two firms are producing identical goods in a market characterized by the inverse demand curve P = 60 - 2Q, where Q is the sum of Firm 1's and Firm 2's output, q_1 + q_2. Each firm's marginal cost is constant at $12, and fixed costs are zero. Answer the fo
- Consider the market demand curve to be: P = 1000 ? Q The cost function of a firm to be: C(q) = 10q + q2 (a) What is the monopoly output? (b) What is theConsider the market demand curve to be: P = 100
- If the inverse demand curve a monopoly faces is p=100-2Q, and MC is constant at 16, then profit maximization: a. is achieved by setting price equal to 21 b. is achieved when 21 units (Q) are produced c. is achieved only by shutting down in the short run d
- Two firms, 1 and 2, compete in a market with demand P = 1 - Q, where P is the market price and Q is the market output. The marginal costs of firm 1 is 1/2 and firm 2 is c less than 3/4. a) Compute the
- The monopolist faces a demand curve given by D(p) = 100 - 2p. Its cost function is c(y) = 2y. a. What is its optimal level of output and price? b. If the demand curve facing the monopolist has a constant elasticity of 2, then what will be the monopolist's
- The demand curve that a monopolist firm faces is: a. the same as the demand curve facing a perfectly competitive firm, except the monopolist is a price maker and the competitive firm is a price taker. b. the same as the demand curve facing a perfectly com
- The inverse demand curve a monopoly faces is p = 120 - Q. The firm's cost curve is C(Q) = 50 + 5Q.
- The demand curve that a monopolist faces is given by P = 75 - 0.5 Q, so their marginal revenue is MR = 75 - Q, and the marginal cost function is given by MC = 2 Q. Assume also that ATC at the profit-maximizing level of production is equal to $12.50. The d
- A monopolist faces the demand curve P = 11 - Q. The firm's cost function is C = 6Q. a. Draw the demand and marginal revenue curves, and the average and marginal cost curves. What are the monopolist's
- When a profit-maximizing firm in a monopolistically competitive market is in a long-run equilibrium: A) marginal cost is falling B) price exceeds marginal costs C) demand curve will be perfectly ela
- The marginal revenue curve for a single-price monopoly: a. is upward sloping. b. is horizontal. c. lies below the market demand curve. d. lies above the market demand curve. Compared to a competitive
- In the kinked demand curve model of oligopoly, a firm's marginal revenue curve A. is kinked at the output level at which the demand curve is kinked. B. has a gap at an output level that is greater than that at which the demand curve is kinked. C. is kinke
- The market demand function for a good is given by Q = D(p) = 800 - 50p. For each firm that produces the good, the total cost function is TC(Q) = 4Q + Q2/2. The marginal cost is MC(Q) = 4 + Q. Assume that firms are price takers. a. What is the supply funct
- The inverse market demand in a homogeneous product Cournot duopoly is P=100-2(Q1+Q2), and the costs are given by C(Q1) = 12Q1 and C(Q2) = 20Q2. The implied marginal costs are $12 for firm 1 and $20 fo
- #1. The inverse market demand in a homogeneous product Cournot duopoly is P=100-2(Q1+Q2), and the costs are given by C(Q1) = 12Q1 and C(Q2) = 20Q2. The implied marginal costs are $12 for firm 1 and $