ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- The accompanying graph depicts a hypothetical monopoly. Follow instuctions 1-3 below to identify the monopoly's profits 1. Place point E at the monopoly's profit maximizing price and quantity 2. Move the average total cost (ATC) curve to a position that depicts the monopoly earning a positive profit. 3. Place the area labeled Profit in the area of the graph that represents the monopoly's profit 10 MC Profit 7 ATC 4. 3 2 1 MR 0 4. 1 3 7 Quantity (millions of units) 10 LO et LO Price (S per unit)arrow_forwardIs a monopoly always undesirable? Support your answer with a diagram. (Limit your answer to 1 side of A4 paper)arrow_forwardReview the graph at right for a monopoly market (enter all of your responses as whole numbers). How much is the consumer surplus? $ 450 How much is the producer surplus? $ 1350 How much is the deadweight loss? $ 225 Monopoly total surplus is $ A *** 80- 160 60**** 30- 10- 0- Price 0 MC MR D 10 20 30 40 50 60 70 80 90 100 Quantityarrow_forward
- Give the perfect answer in 10 minutesread question carefullyarrow_forwardRaphael’s hair salon is a monopoly in a small town and is currently earning an economic profit. Draw a correctly labeled graph for Raphael and include the curves that are necessary to identify the following. The profit-maximizing price and quantity of haircuts, labeled Pm and Qm The area representing economic profits, shaded completely Does Raphael’s hair salon produce the allocatively efficient quantity? Explain. Assume that Raphael signs a new lease with an increase in rent, a fixed cost. Will the price of haircuts provided by Raphael increase, decrease, or stay the same in the short run? Explain. Assume that new hair salons enter the market and that the market becomes monopolistically competitive. Answer each of the following. The entry of new hair salons creates close substitutes for each individual salon’s services. As a result, will the demand for Raphael’s hair salon become more elastic or become less elastic, or will there be no change in the elasticity? Will…arrow_forwardCalculate the maximum profit if the market is a monopoly according to this diagram in the image below.arrow_forward
- An example of a monopoly could be: a. the only veterinary doctor on an island b. a big hospital in a big city c. a big city restaurant d. the hotels in san juanarrow_forwardRaphael’s hair salon is a monopoly in a small town and is currently earning an economic profit. Draw a correctly labeled graph for Raphael and include the curves that are necessary to identify the following. The profit-maximizing price and quantity of haircuts, labeled Pm and Qm The area representing economic profits, shaded completely Does Raphael’s hair salon produce the allocatively efficient quantity? Explain. Assume that Raphael signs a new lease with an increase in rent, a fixed cost. Will the price of haircuts provided by Raphael increase, decrease, or stay the same in the short run? Explain. Assume that new hair salons enter the market and that the market becomes monopolistically competitive. Answer each of the following. The entry of new hair salons creates close substitutes for each individual salon’s services. As a result, will the demand for Raphael’s hair salon become more elastic or become less elastic, or will there be no change in the elasticity? Will…arrow_forwardWhich of the following is least like monopoly? Sony Corporation A natural gas utility company A cable tv company An electric utility companyarrow_forward
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