6. The following graph shows the demand, marginal revenue, and marginal cost curves for a single-price monopolist that produces a drug that helps relieve arthritis pain. Place the grey point (star symbol) in the appropriate location on the graph to indicate the monopoly outcome such that the dashed lines reveal theprofit-maximizing price and quantity of a single-price monopolist. Then, use the green rectangle (triangle symbols) to show the profits earned by themonopolist.PRICE (Dollars per dose)1098721004MR8MC = ATC3212 16 20 24 28QUANTITY (Millions of doses per year)Demand36 40Monopoly OutcomeMonopoly Profits(?)Suppose that should the patent on this particular drug expire, the market would become perfectly competitive, with new firms immediately enteringthe market with essentially identical products.Further suppose that in this case the original firm will hire lobbyists and make donations to several key politicians to extend its patent for one moreyear. The firm is prepared to spend up to $ million to extend its patent.

A monopoly is a market structure where numerous buyers and a single seller coexist. In the market,…

Place the grey point (star symbol) in the appropriate location on the graph to indicate the monopoly outcome such that the dashed lines reveal the profit-maximizing price and quantity of a single-price monopolist. Then, use the green rectangle (triangle symbols) to show the profits earned by the monopolist. PRICE (Dollars per dose) 10 9 8 2 1 0 0 4 MR MC = ATC 28 8 12 16 20 24 32 QUANTITY (Millions of doses per year) Demand 36 40 Monopoly Outcome Monopoly Profits ? Suppose that should the patent on this particular drug expire, the market would become perfectly competitive, with new firms immediately entering the market with essentially identical products. Further suppose that in this case the original firm will hire lobbyists and make donations to several key politicians to extend its patent for one more year. The firm is prepared to spend up to $ million to extend its patent.

Place the grey point (star symbol) in the appropriate location on the graph to indicate the monopoly outcome such that the dashed lines reveal the profit-maximizing price and quantity of a single-price monopolist. Then, use the green rectangle (triangle symbols) to show the profits earned by the monopolist. PRICE (Dollars per dose) 10 9 8 2 1 0 0 4 MR MC = ATC 28 8 12 16 20 24 32 QUANTITY (Millions of doses per year) Demand 36 40 Monopoly Outcome Monopoly Profits ? Suppose that should the patent on this particular drug expire, the market would become perfectly competitive, with new firms immediately entering the market with essentially identical products. Further suppose that in this case the original firm will hire lobbyists and make donations to several key politicians to extend its patent for one more year. The firm is prepared to spend up to $ million to extend its patent.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

6 Suppose a CEO is considering acting as a monopolist, where she could earn 4,662,376 in profits, however, if caught, she will spend time in prison and have to pay an additional 269,182 in court fees. If the CEO values her freedom at 1,188,914 and there's a 10% chance she'll be caught, what is her expected profit from acting as a monopolist. Round your answer to the nearest whole number.
1. A U.S. patent for the drug that most effectively treats HIV prevents other drug companies from producing a comparable substitute for patients. a. What is the effect of patent protection on the demand for a drug? How does the shape of the demand curve differ before and after a patent has expired? Support your explanation with a graph. b.Demand curves respond to preferences, income, and costs of substitute and complements. Discuss how these factors determine a country’s demand for HIV treatments. How might the effects of the patent protection differ across countries?
7.
Suppose that Karina is running a tattoo parlor with two types of customers. The first type is willing to pay $80 for a tattoo, while the second type is willing to pay just $40 for a tattoo. The ink for a tattoo costs $10. Customers will only buy one tattoo each. If Karina can only set a single price, what price will she set? a. 80 b. 40 c. 70 d. 30
5
2. In the following table are demand and cost data for a pure monopolist. Complete the table by filling in the columns for total revenue, marginal revenue, and marginal cost. Answer these three questions: (a) What output will the monopolist produce? (b) What price will the monopolist charge? (c) What total profit will the monopolist receive at the profit-maximizing level of output? Quantity Price revenue 0 1 2 3 4 5 6 O 9 10 $34 $ 32 30 28 26 24 22 20 18 16 14 Total Marginal Total revenue cost มี $ 20 36 46 50 54 56 64 80 100 128 160 Marginal cost $
I'm not sure if I am doing this correctly, also not sure where the profit and loss go on the graphs.
7. A monopolist has a (high/low) price elasticity of demand for its output. A monopoly is always socially inefficient (True/False). A single-price monopolist always makes zero profits in the long run (true/false). A single-price monopolist is always socially inefficient (true/false).
2] Price Discrimination. A monopolist is selling the same product in three different markets, East Coast (E), Midwest (M) and West Coast (W). The demand for the product is different in each market. Demand in East Coast: P= 14-20 Demand in Midwest: P 16-Q Demand West Coast: P=14-Q The firm's constant marginal cost is MC = 4. There is no fixed cost. a) What price would the monopolist charge in each market if it can price discriminate? Suppose now that a new regulation states that this product should be sold at the same price in every market. b) What price would the monopolist charge? c) Suppose the monopolist can price discriminate, as in part a). In addition, it can set a two part tariff. Find the unit price and fixed fee that maximizes profits in the East Coast.
3 You are the manager of a monopoly. Your analytics department estimates that a typical consumer’s inverse demand function for your firm’s product is P = 350 −20Q, and your cost function is C(Q) = 70Q. a. Determine the optimal two-part pricing strategy. Per-unit fee: $ 70 Fixed fee: $ b. How much additional profit do you earn using a two-part pricing strategy compared with charging this consumer a per-unit price? $
8. Natural monopoly analysis The following graph shows the demand (D) for gas services in the imaginary town of Utilityburg. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local gas company, a natural monopolist. On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist. PRICE (Dollars per hundred cubic feet) 20 18 16 14 0 0 1 2 3 5 6 7 8 QUANTITY (Hundreds of cubic feet) MR 4 ATC MC 9 10 D Monopoly Outcome (? Which of the following statements are true about this natural monopoly? Check all that apply. In order for a monopoly to exist in this case, the government must have intervened and created it.
Please refer to th graph attached. The graph shows the Demand, Marginal Revenue, Average Total Cost, Average variable Costs and Marginal Cost curves for a monopolist. (a) What is the profit maximizing/ loss minimizing quantity of output and what is the maximum price the monopolist can charge? (b) Is this monopolist making economic profit or economic loss? How do you know? Explain please. (c) Calculate the firms profit or loss and show the economic profit/loss on the graph.