Assume that one of the hot dog vendors successfully lobbies the city council to obtain the exclusive right to sell hot dogs within the city limits. This firm buys up all the rest of the hot dog vendors in the city and operates as a monopoly. Assume that this change doesn't affect demand and that the new monopoly's marginal cost curve corresponds exactly to the supply curve on the previous graph. Under this assumption, the following graph shows the demand (D), marginal revenue (MR), and marginal cost (MC) curves for the monopoly firm. Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and quantity of a monopolist. Use the green points (triangle symbol) to shade the area that represents consumer surplus, and use the purple points (diamond symbol) to shade the area that represents producer surplus. PRICE (Dollars per hot dog) 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0 0 30 Monopoly MC D MR 90 120 150 180 210 240 270 300 QUANTITY (Hot dogs) Competitive Monopoly Monopoly Outcome Price Market Structure (Dollars) Consumer Surplus Consider the welfare effects when the industry operates under a competitive market versus a monopoly. Producer Surplus On the monopoly graph, use the black points (plus symbol) to shade the area that represents the loss of welfare from a monopoly, or deadweight loss. That is, show the area that was formerly producer surplus or consumer surplus and now does not accrue to anybody. Deadweight Loss Deadweight loss occurs when a monopoly controls a market because the resulting equilibrium is different from the competitive outcome, which is efficient. Quantity (Hot dogs) In the following table, enter the price and quantity that would arise in a competitive market; then enter the profit- maximizing price and quantity that would be chosen if a monopolist controlled this market. Given the summary table of the two different market structures, you under a and the quantity is higher under a monopoly competitive market al, the price is higher

The following diagram illustrates the demand curve facing a monopoly in an industry with no economies or diseconomies of scale and no fixed costs. In the short and long run, MC = ATC. 1.) Using the point drawing tool, indicate the monopoly output and monopoly price (Monopoly) in the figure to the right. Attach the appropriate provided label. 2.) Using the rectangle drawing tool, shade in monopoly profits (Profit). Attach the appropriate provided label. 3.) Using the triangle drawing tool, shade in the "excess burden" or "welfare costs" of the monopoly (Excess burden). Attach the appropriate provided label. Note: Carefully follow the instructions above and only draw the required objects. The monopoly creates excess burden because O A. it produces where price equals marginal cost. B. it produces an inefficiently large amount of output. O C. it charges a price that is too low. D. it produces where marginal cost is positive. E. it produces where price is above marginal cost. MR Output, Q…

In many countries, the government chooses to "internalize" the monopoly by owning monopoly providers of goods and services. (In some cases these firms are "nationalized" and the government actually buys or confiscates firms that operate in monopoly markets). Explain TWO advantages and TWO disadvantages of such an approach

You are the manager of a monopoly, and your analysts have estimated your demand and cost functions as P = 400 - 4Q and C(Q) = 2,000+ 3Q2, respectively, a . What price-quantity combination maximizes your firm's profits? Instructions: Round your response to the nearest penny (two decimal places). Price: $ Quantity: units b. Calculate the maximum profits. Instructions: Round your response to the nearest penny (two decimal places).

If the inverse demand curve is p=100-Q and the marginal cost is constant at $10, how does charging the monopoly a specific tax of t= $12 per unit affect the monopoly optimum and the welfare of consumers, the monopoly, and society (where society's welfare includes the tax revenue)? What is the incidence of the tax on consumers? As a result of the tax, the profit-maximizing quantity decreases by 6 units and the profit-maximizing price increases by $6. (Enter numeric responses using real numbers rounded to two decimal places.) Show Transcribed Text Consumer surplus by $ The monopoly's surplus (producer surplus) Finally, society's welfare by $. The consumer incidence of the tax is%. by S.

Intel is the world’s largest manufacture of semiconductor chips by revenue. During the 1990s, Intel became the dominant supplier of microprocessors for PCs and was known for aggressive and anti-competitive tactics in defense of its market position. Consider the market for Intel’s Pentium II processor, released in May 1997. Assume Pentium II enjoyed a monopoly in computer processors. Intel’s cost of production is characterized by function C = 10Q2, marginal cost MC = 20Q, while the market demand for the product is P = 400 − 10Q.     Calculate Intel’s profit-maximizing quantity for its Pentium II processor. How much would Intel price its Pentium IIs?

Provide an example of a cost function for which a natural monopoly exists. Why might we want to allow natural monopolies to exist (e.g. how might social welfare benefit from such a monopoly)?

Suppose a monopoly firm’s total cost of production TC = f + c•Q where f > 0 and c > 0. Is this firm a “natural monopoly”? Answer ‘Yes” or “No” based on your explanation of the meaning of a “natural monopoly.”

The following diagram illustrates the demand curve facing a monopoly in an industry with no economies or diseconomies of scale and no fixed costs. In the short and long run, MC = ATC. 1.) Using the point drawing tool, indicate the monopoly output and monopoly price (Monopoly) in the figure to the right. Attach the appropriate provided label. 2.) Using the rectangle drawing tool, shade in monopoly profits (Profit). Attach the appropriate provided label. 3.) Using the triangle drawing tool, shade in the "excess burden" or "welfare costs" of the monopoly (Excess burden). Attach the appropriate provided label. Note: Carefully follow the instructions above and only draw the required objects. The monopoly creates excess burden because A. it produces where marginal cost is positive. B. it produces where price equals marginal cost. OC. it produces an inefficiently large amount of output. D. it produces where price is above marginal cost. E. it charges a price that is too low. Click the graph,…

BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Suppose that BYOB cannot price discriminate; that is, it sells its beer at the same price per can to all customers. The following graph shows the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) for beer in this market. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for BYOB. If BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if BYOB is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. PRICE (Dollars per can) 4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0 MC 0 0.5 1.5 ATC MR D 1.0 2.0 2.5 3.0 QUANTITY (Thousands of cans of beer) 3.5 4.0 Monopoly Outcome Profit Loss