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Microeconomics Homework 6 ( need it ASAP!)

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Subject: Economics
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Posted On: 12/14/2013 02:23 PM

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HW6 Fall 2012

Due Date: December 3rd, 2012 Principles of Econ: Micro

Name__________________________

1. Each of the following firms possesses market power. Explain its source.

a) Merck, the producer of the patented cholesterol-lowering drug Zetia.

b) Verizon, a provider of local telephone service.

c) Chiquita, a supplier of bananas and owner of most banana plantations.

2. Download Records decides to release an album by the group Mary and the Little Lamb. It produces the album with no fixed cost, but the cost of downloading the album to a CD and paying Mary her royalty is $6 per album. Download Records can act as a single-price monopolist. Its marketing division finds that the demand schedule for the album is as shown in the accompanying table:

Price of Album

Quantity of Albums Demanded

TR

MR

$22

0

$20

1000

$18

2000

$16

3000

$14

4000

$12

5000

$10

6000

$8

7000

a) Calculate the Total Revenue and Marginal Revenue per album.

b) The marginal cost of producing each album is constant at $6. To maximize profit what level of output should Download Records choose, and which price should it therefore charge? Explain your answer.

c) Mary renegotiates her contract and now needs to be paid a royalty of $14 per album. So the marginal cost rises to be constant at $14. To maximize profit, what level of output should Download Records now choose and what price should it charge for each album?

Tags asap need homework microeconomics album cost mary price constant profit revenue downloadrecords level marginal maximize records output royalty charge choose demanded finds demand albums 0 shown table schedulefor quantity accompanying 1

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Preview: primary xxxxxxxxxxxxx familial xxx nonfamilial) hyperlipidemia xxxx diet alone xx not xxxxxx xxxxx is xxx producer of xxx patented cholesterol xxxxxxxx drug xxxxx xxx is xxxx producer of xxx same drug xxx hence xxx xxxxxxxx power xxxx the same xxxxxxx and thus xxx take xxxxxxx xxxxxxxxx by xxxxxx as it xx Merck’s patented xxxxxxx Verizon, x xxxxxxxx of xxxxx telephone service xxxxxxx being a xxxxxxxxx service xxx xxxxx unlimited xxxxx on their xxxx rates and xxxxx internet xxx xxxxx messaging xxxxxxxxxx Being a xxxxx telephone service xxxxxxxx it xxx xxxx act xx a monopoly xxx set tariffs xx call xxxxx xxxxx price xxxxx be greater xxxx the marginal xxxx and xxxx xxxxxx market xxxxx to maximize xxx profits Any xxxxx telephone xxxxxxx xx the xxxx area would xxxxxx its monopoly xxxxx Chiquita, x xxxxxxxx of xxxxxxx and owner xx most banana xxxxxxxxxxx Chiquita xxxxx xxx owner xx the most xxxxxx of banana xxxxxxxxxxx naturally xx xxx.....
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