Suppose a monopolist has a demand curve that can be expressed as P = 90 - Q. The monopolist's marginal revenue curve can be expr
essed as MR = 90 - 2Q. The monopolist has constant marginal costs and average total costs of $10. Refer to Scenario 15-4. The profit-maximizing monopolist will have a deadweight loss of a. $6, 400. b. $3, 200 c. $1, 600. d. $800.
2 answers:
Answer:
d. $800
Explanation:
MR refers to the margin revenue that is equal to the marginal cost MC to maximize a company's profit (Monopoly condition), therefore:
P = 90 - Q
MR = MC = $10 = 90 - 2Q
solving the equation:
Q = 40
P = 50
The deadweight loss DL can be calculated using the formula:
DL = 0.5*Q*(P-MR) = 0.5*40*(50-10) = 800
Note: the deadweight loss can be calculated graphically, the yellow area in the image down below is known as the deadweight loss area and its value could be extracted from the graph.
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Answer:
The answer is "Option 4".
Explanation:
The Herfindahl-Hirschman Index formula:
here sn is the firm n's share of the market proportion represented the society in general number instead of a decimal
Index Herfindahl-Hirschman:
Index Herfindahl-Hirschman(Result of the merger, firms with profit margins of 6% and 5% provided market shares of respectively).
The market with just an HHI of less than 1,500 is called a competitive industry, one on an HHI of 1,500 to 2,500 is called a moderately competitive store, and one on an HHI of 2,500 or higher is considered a highly potent store by us Justice department.
All businesses operate in a moderately crowded market, as well as a merger such as this reduces competition (increases chances of monopoly). Also as result, the Justice Dept may examine its merger but will most likely deny this because the Herfindahl-Hirschman index has risen.
