Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 12, Problem 4WNG
To determine
Determine the quantity in the figure that is consistent with profit regulation and price regulation.
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If the government wants to increase the market efficiency through price regulation, would you suggest the government setting the price equal to the firm’s marginal cost or its average total cost? Explain in detail with the diagram in part
U.S. pharmaceutical companies charge different prices for prescription drugs to buyers in different nations, depending on elasticity of demand and government-imposed price ceilings. Explain why these companies, for profit reasons, oppose laws allowing reimportation of their drugs back into the United States.
QUESTION 2
Consider the following graph:
Price
P1
P2
P3
P4
P5
Q5 Q302 01
04
Curve D
Curve A
Market efficient quantity
Market efficient price
Curve C
Curve A = MR, Curve B = Demand, Curve C = ATC, Curve D = MC
Match the correct values to the descriptions:
▾ Monopoly profit maximizing quantity
Curve B
Monopoly profit maximizing price
Quantity
A. P1
B. P2
C. P3
D. P4
E. P5
F. Q1
G. Q2
H. Q3
I. Q4
J. Q5
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- It is often said that a competitive market is more beneficial for the consumers as compared to the monopoly market. Why ? Explain.arrow_forwardU.S. pharmaceutical companies charge different prices for prescription drugs to buyers in different nations, depending on elasticity of demand and government-imposed price ceilings. Explain why these companies, for profit reasons, oppose laws allowing re-importation of drugs to the United States.arrow_forwardDraw the graph. If the monopoly is a price-discriminating monopoly charging some customers P1= $950 and other customers P2=$400, then: 1. At the price P1= $950, the monopoly will sell a quantity Q1 = ______ 2. At the price P2= $400, the monopoly will sell a quantity Q2 = ______. (Obs: calculation required here!)3. Total quantity sold at both prices is Q3 = Q1 + Q2 = ___________. 4. The profit earned from selling the quantity Q1 at P1 is Profit1 = ____________________(identify the area on the graph and calculate it).5. The profit earned from selling the quantity Q2 at P2 is Profit2= ____________________(identify the area on the graph and calculate it).6. The total profit earned by the price discriminating monopolist is Profit = Profit1 + Profit2 = _______.arrow_forward
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