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Assignment Presentation by Group 4: Economic Analysis Insights | Microeconomics | Trường Đại học Quốc tế, Đại học Quốc gia Thành phố Hồ Chí Minh

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Identify relationship between variable profit (PS) that the firm gets before and after applying perfect price discrimination and consumer surplus and deadweight loss? + Before discrimination: PS = P*AEC = (AE+CP*).AP*/2 1152$ CS = 288$ DWL= 96$ + After discrimination: Firm expanded output to Q1=32 We got new PS = 1024$, CS = 512$ So, by perfect price discrimination, firm increased profit by getting more CS and DWL. Tài liệu được sưu tầm và soạn thảo dưới dạng file PDF để gửi tới các bạn cùng tham khảo, ôn tập đầy đủ kiến thức, chuẩn bị cho các buổi học thật tốt. Mời bạn đọc đón xem!

Môn: Microeconomics 635 tài liệu

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Assignment 9
Full name: Doan Xuan Nhi
Student code: 11224906
Problem 1:
a. To maximize the profit, MR=MC
+ TR = P.Q = (15-Q).Q = 15Q-Q^2
+ MR = TR’ = (15Q-Q^2)’ = 15-2Q
+ MC = TC’ = (7Q)’ = 7
Q = 4
P = 15-4 = 11$
Market power of this firm by Lenner indicator:
L = (P-MC)/P = 11-7/11 = 0.37
b. For perfectly competitive market, to maximize the profit, MC = P
=> 15-Q = 7
=> Q = 8; P=7$
DWL = SAEB = (11-7).(8-4)/2 = 8$
P
P*=11
P1=7
A
B
MC
E
MR
Q
Q*=4
Q1=8
P
I
P*=76
P1
A
MC
B
MC*=52
E
D
C
MR
Q
Q*=24
Q1
Problem 2:
A monopolist has demand function of P= 100-Q and cost functions of AVC= Q+4; FC=200
a. What is optimal output level that maximizes profit? What is that maximum profit?
- To maximize the profit, MR=MC
+ VC = AVC.Q = (Q+4).Q = Q^2+4Q
+ TC = VF+FC = Q^2+4Q+200
MC = TC’ = 2Q+4
+ TR = P.Q = (100-Q).Q = 100Q-Q^2
MR = TR’ = 100-2Q
So, MR=MC 100-2Q=2Q+4
Q=24
Profit max = TR -TC when Q=24; P=76$; Profit max = 100.24-24^2-(24^2+4.24+200) = 952$
b. What is consumer surplus (CS) and deadweight loss (DL) created by this firm?
If this firm a perfect competitive, to maximize the profit, MC = P
2Q+4 = 100-Q
Q1=32
P1=68
+ The consumer surplus = SIAP* = 24.(100-76)/2 = 288$
+ The DWL = SAEB = BE.AE/2 (32-24).(76-52)/2 = 96$
c. Assume this firm applies perfect price discrimination, what is quantity and variable profit of the
firm?
The firrm applies price perfect discrimination, which set all the price level on the demand curve when
expand output to Q1=32.
Variable profit = 32.68-1152 = 1024
d. Identify relationship between variable profit (PS) that the firm gets before and after applying
perfect price discrimination and consumer surplus and deadweight loss?
+ Before discrimination:
PS = P*AEC = (AE+CP*).AP*/2 1152$
CS = 288$
DWL= 96$
+ After discrimination:
Firm expanded output to Q1=32
We got new PS = 1024$, CS = 512$
So, by perfect price discrimination, firm increased profit by getting more CS and DWL.

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Assignment 9 Full name: Doan Xuan Nhi Student code: 11224906 Problem 1:
a. To maximize the profit, MR=MC
+ TR = P.Q = (15-Q).Q = 15Q-Q^2
+ MR = TR’ = (15Q-Q^2)’ = 15-2Q + MC = TC’ = (7Q)’ = 7 15-2Q = 7 Q = 4 P = 15-4 = 11$
Market power of this firm by Lenner indicator: L = (P-MC)/P = 11-7/11 = 0.37
b. For perfectly competitive market, to maximize the profit, MC = P => 15-Q = 7 => Q = 8; P=7$ P P*=11 A P1=7 MC B E MR Q Q*=4 Q1=8
DWL = SAEB = (11-7).(8-4)/2 = 8$ Problem 2:
A monopolist has demand function of P= 100-Q and cost functions of AVC= Q+4; FC=200
a. What is optimal output level that maximizes profit? What is that maximum profit?
- To maximize the profit, MR=MC
+ VC = AVC.Q = (Q+4).Q = Q^2+4Q + TC = VF+FC = Q^2+4Q+200 MC = TC’ = 2Q+4
+ TR = P.Q = (100-Q).Q = 100Q-Q^2 MR = TR’ = 100-2Q So, MR=MC 100-2Q=2Q+4 Q=24
Profit max = TR -TC when Q=24; P=76$; Profit max = 100.24-24^2-(24^2+4.24+200) = 952$
b. What is consumer surplus (CS) and deadweight loss (DL) created by this firm? P I A P*=76 MC P1 B E MC*=52 D C MR Q Q*=24 Q1
If this firm a perfect competitive, to maximize the profit, MC = P 2Q+4 = 100-Q Q1=32 P1=68
+ The consumer surplus = SIAP* = 24.(100-76)/2 = 288$
+ The DWL = SAEB = BE.AE/2 (32-24).(76-52)/2 = 96$
c. Assume this firm applies perfect price discrimination, what is quantity and variable profit of the firm?
The firrm applies price perfect discrimination, which set all the price level on the demand curve when expand output to Q1=32.
Variable profit = 32.68-1152 = 1024
d. Identify relationship between variable profit (PS) that the firm gets before and after applying
perfect price discrimination and consumer surplus and deadweight loss? + Before discrimination:
PS = P*AEC = (AE+CP*).AP*/2 1152$ CS = 288$ DWL= 96$ + After discrimination: Firm expanded output to Q1=32
We got new PS = 1024$, CS = 512$
So, by perfect price discrimination, firm increased profit by getting more CS and DWL.

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