Re: Monopoly

Posted by Mauli on May 29, 2013; 2:08pm
URL: http://discussion-forum.276.s1.nabble.com/Monopoly-tp7581456p7581468.html

here, note that the TR is fixed at 100 . wtever be the price.
ie: TR= (100/Q)*Q = 100
so the max profit will be where he minimises his costs.
MC=1.
TC=MC*Q
   =1*100/P
 the profit will be max if p=20.( u can check that)
here, the profits are 95.
therefore he max profits at q=5.

for this dwl wala part i am not sure..but
MC now becomes 2.
it shifts up.
TR IS STILL THE SAME AT 100.
TC is now 2*100/P
this will also be min when P=20. but now , the profits become 90.
the consumers have an elasticity of -1. that is the dd curve is perfectly elastic .
so, they donot bear the  burden of the tax. the entire tax gets passed on to the producer.
his profits reduce by 5. but he still maximises them at q=5..
someone please cnfrm this part . does it make sense..?
is it that there is no dead wt loss?