Starbucks is one of the largest coffee company in the world, respectively that have substantial supply-chain relations with the world's major coffee-producing countries. Thus, Starbucks coffee houses can be considered as one of the dominant monopoly firm in the coffee industry worldwide. Assume Starbucks (as a monopolist firm) faces the demand curve P= 11 - Q for their normal coffee product, where P is measured in dollars per unit and Q in thousands of units produce. The company (monopolist) has a constant average cost of $6 per unit, which also represents the firm's marginal cost (MC). a. Calculate and draw the average revenue (AR) and marginal revenue (MR) curves and the average and marginal cost curves (AC and MC). Show your caleulations. Draw only ONE diagram for all the 4 curves that required to represent the firm economic condition for Starbucks coffee company. b. What are the Starbucks profit-maximizing price and quantity as monopolist's? Why? Discuss what is the resulting profit and show your calculation? Explain your answer. Diagram NOT required. c. Let say if the government agency sets a price ceiling of $7 per unit for Starbucks coffe product. What quantity will be produced, what will the firm's profit be? What happens to the degree of monopoly power face by Starbucks coffee company? Explain and show your calculation. d. Assume that the local government decided to increase farmers' incomes through poliey intervention. Why do price support or acreage-limitation programs cost society more than simply giving farmers a subsidy? Explain the economic conditions under this situation and draw ONE (1) appropriate diagram to support your answer.
Starbucks is one of the largest coffee company in the world, respectively that have substantial supply-chain relations with the world's major coffee-producing countries. Thus, Starbucks coffee houses can be considered as one of the dominant monopoly firm in the coffee industry worldwide. Assume Starbucks (as a monopolist firm) faces the demand curve P= 11 - Q for their normal coffee product, where P is measured in dollars per unit and Q in thousands of units produce. The company (monopolist) has a constant average cost of $6 per unit, which also represents the firm's marginal cost (MC). a. Calculate and draw the average revenue (AR) and marginal revenue (MR) curves and the average and marginal cost curves (AC and MC). Show your caleulations. Draw only ONE diagram for all the 4 curves that required to represent the firm economic condition for Starbucks coffee company. b. What are the Starbucks profit-maximizing price and quantity as monopolist's? Why? Discuss what is the resulting profit and show your calculation? Explain your answer. Diagram NOT required. c. Let say if the government agency sets a price ceiling of $7 per unit for Starbucks coffe product. What quantity will be produced, what will the firm's profit be? What happens to the degree of monopoly power face by Starbucks coffee company? Explain and show your calculation. d. Assume that the local government decided to increase farmers' incomes through poliey intervention. Why do price support or acreage-limitation programs cost society more than simply giving farmers a subsidy? Explain the economic conditions under this situation and draw ONE (1) appropriate diagram to support your answer.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
I need D
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education