In a monopoly in the long run: A) entry will not occur. B) economic profits will be eliminated by the entry of rival firms. C) economic profits will be reduced, but not eliminated entirely, by the entry of rival firms. D) social surplus is maximized.
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B) economic profits will be eliminated by the entry of rival firms.
C) economic profits will be reduced, but not eliminated entirely, by the entry of rival firms.
D) social surplus is maximized.
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- The figure shows the market demand curve for penicillin, an antibiotic medicine. Initially, the market was supplied by perfectly competitive firms Later, the government granted the exclusive right to produce and sell penicillin to one firm. The figure also shows the marginal revenue curve (MR) of the firm once it begins to operate as a monopoly. The marginal cost is constant at $3, irrespective of the market structure What is the surplus enjoyed by the firm when it is the sole supplier of the medicine? OA. 590 OB. $180 OC. $30 OD. $60 Price/Cost (5) 10 1 10 20 30 40 MR Demand 50 60 70 80 90 Quantity (units)Does a monopoly face any market constraints? Question options: a) No. A monopoly can produce as much as it wants and charge whatever price it chooses. b) Yes. To sell a larger quantity, the monopoly must set a lower price. c) Yes. It can't charge a higher price unless demand for its good or service increases. d) Yes. It must produce at its minimum efficient scale to maximize profit. e) No. A monopoly determines demand and supply.Question 1 was answered and it is as follows "A market has an inverse demand curve of P = 40-Q and marginal cost of MC = 4+2Q. Find the competitive equilibrium price, quantity, and surplus. Show your work." Question 2 that needs to be answered: "In the same market as question 2, assume the marginal cost belongs to a monopolist. Find monopoly equilibrium price, quantity, surplus, and dead weight loss. Show your work."
- A natural monopoly is most likely to occur in which of the following industries? Group of answer choices a. the pharmaceutical industry because the development and approval of new drugs through the Food and Drug Administration can take more than 10 years b. the diamond mining and marketing industry because one firm can control a key resource c. the software industry because of the importance of network externalities d. an industry where fixed costs are very large relative to variable costsSuppose a monopoly faces the market demand in the nearby figure. It has constant marginal cost equal to $6. Find the perfectly competitive quantity and price assuming the market is made up of producers each with marginal cost $6. Give a numeric answer for each and show them on the graph. What is the efficient quantity? Give a numeric answer and show it on the graph. Which market structure, monopoly or perfect competition, comes closer to achieving the efficient quantity? Now suppose there is a negative externality associated with producing the good of $5 per unit. Now which market structure, monopoly or perfect competition, comes closer to achieving the efficient quantity? Explain briefly.The following figure shows the demand curve for Good X in a perfectly competitive market. Later, the government grants one of the firms the exclusive right to manufacture and sell Good X. MR represents the marginal revenue curve of the firm when it operates as a monopoly. The marginal cost of producing Good X is constant at $5. Price/Cost (S) 4 Demand 3 MR 2 1 10 11 12 13 14 15 16 17 18 Quantity (1,000 units) a) What is the quantity supplied when the market is perfectly competitive? What happens to the quantity supplied once the market changes to a monopoly? b) What is the market price when the market is perfectly competitive? What is the market price when the market changes to a monopoly? c) Compare the consumer surplus when the market is perfectly competitive and when the market is a monopoly. Is there any producer surplus or deadweight loss in either case? If yes, then how much?
- Suppose a monopoly is producing at its profit-maximising (loss-minimizing) quantity, and the price corresponding to this quantity is below average total cost but above average variable cost. The monopoly will shut down in the short run but return to production in the long run shut down in the short run and exit the market in the long run keep producing both in the short run and in the long run keep producing in the short run but exit the market in the long run None of the above.Suppose a monopoly faces the market demand in the figure attached. It has a constant marginal cost equal to $6. a. Find the monopoly quantity and price. Give a numeric answer for each and show them on the graph. b. Find the perfectly competitive quantity and price assuming the market is made up of producers each with marginal cost $6. Give a numeric answer for each and show them on the graph. c. What is the efficient quantity? Give a numeric answer and show it on the graph. Which market structure, monopoly or perfect competition, comes closer to achieving the efficient quantity? d. Now suppose there is a negative externality associated with producing the good of $5 per unit. Now which market structure, monopoly or perfect competition, comes closer to achieving the efficient quantity? Explain briefly.Name a firm of business that is selling a good or item that is not so unique. However, in the local market, it's able to enjoy monopoly power. Although it's a monopoly, you don't see other firms entering the market. Name one possible entry barrier that could be keeping other firms from entering and competing with the suggested business.
- An unregulated natural monopoly bottles Mt. McKinley air, unique clean air that has no substitutes. The monopoly's total fixed cost is $30,000 a year and its marginal cost is 10 cents a can. The graph illustrates the demand for Mt. McKinley air. Draw the average total cost curve. Plot the four control points at the quantities 100,000, 200,000, 300,000, and 400,000. Label the curve. Draw a point at the new quantity and price if the regulator sets a price cap such that the monopoly breaks even. The number of cans produced sold its marginal cost. A. is; benefit; exceeds B. is not; benefit; exceeds OC. is not; revenue; is greater than D. is; revenue; equals the efficient quantity because the marginal from the last can 60- 50- 40- 30- 20 20 10- Price (cents per can) 0- ATC MC D $300 100 200 300 400 Quantity (thousands of cans per year) >>> Draw only the objects specified in the question. 500Suppose you are a monopolist in the market for a specific Q video game. Your demand curve is given by P = 80- - and 2 your marginal cost curve is MC = Q. Your fixed cost is $400. i) Derive the marginal revenue curve. ii) Calculate the equilibrium price and quantity. iii) What is the profit?Suppose that Intel has a monopoly in the market for computer chips. In order to produce X computer chips, it costs Intel C(X) = 2X2. (i) Find the marginal cost of producing a computer chip for Intel. ii) The demand for computer chips is X =12 − 0.25P. Find the level of output that maximizes Intel’s profits. What price is Intel charging?
