The following statements give some information about six firms. a. Coca-Cola cuts its price below that of Pepsi-Cola to increase profit. b. A single firm, protected by a barrier to entry, produces a personal service that has no close substitutes. c. A barrier to entry exists, but the good has some close substitutes. d. A museum offers discounts to students and seniors. e. A firm can sell any quantity it chooses at the going price. 1. A firm experiences economies of scale even when it produces the quantity that meets the entire market demand. Which of the six cases are monopolies or might give rise to monopoly? A monopoly might arise in the markets described in OA. statements c, d, and e B. statements e and f C. statements b and f D. statements a, b, and c

The following statements give some information about six firms. a. Coca-Cola cuts its price below that of Pepsi-Cola to increase profit. b. A single firm, protected by a barrier to entry, produces a personal service that has no close substitutes. c. A barrier to entry exists, but the good has some close substitutes. d. A museum offers discounts to students and seniors. e. A firm can sell any quantity it chooses at the going price. 1. A firm experiences economies of scale even when it produces the quantity that meets the entire market demand. Which of the six cases are monopolies or might give rise to monopoly? A monopoly might arise in the markets described in OA. statements c, d, and e B. statements e and f C. statements b and f D. statements a, b, and c

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Ilia is driving home from work. She needs to buy gas and notices an Exxon-Mobil station on one side of the street and a Shell station on the other side of the street. Although run by different companies, the two stations sell gasoline at the same price. a. The most likely reason that the price is the same is that _gas stations always make a profit, so they can charge any price they want. _drivers need gas and are willing to pay whatever price a gas station charges. _government regulation requires both gas stations to charge the same price. _consumers view gasoline from different gas stations as perfect substitutes. b. If one station increases its price, _it will be fined by the government. _it will sell more gasoline. _it will make a higher profit. _it will lose customers to the cheaper station across the street.
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Imagine you are the owner of the Omaha Surfboard Company. You have a branch in Omaha and in Long Beach CA. After some market research you find the following surfboard demand for each market, Omaha Demand: Qo = 1000 – 10P Long Beach Demand: QL = 1000 – 5P Combined/Total Demand: Q = 2000 – 15P Your marginal cost is constant at $40. a. Find your price and quantity if you treated the market as a single entity with a single price. What is your profit? (Hint: find Marginal Revenue and set equal to MC) b. If you treat each market separately, what is P and Quantity in each market, and final profit?
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Ilsia is driving home from work. She needs to buy gas and notices an Exxon-Mobil station on one side of the street and a Shell station on the other side of the street. Although run by different companies, the two stations sell gasoline at the same price. a. The most likely reason that the price is the same is that drivers need gas and are willing to pay whatever price a gas station charges. consumers view gasoline from different gas stations as perfect substitutes. government regulation requires both gas stations to charge the same price. gas stations always make a profit, so they can charge any price they want. b. If one station increases its price, it will make a higher profit. it will lose customers to the cheaper station across the street. it will be fined by the government. it will sell more gasoline.
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A monopoly barber sells haircuts to adults for 30 and A monopoly barber sells haircuts to adults for $30 and to children for $10. Let ηΑ represent adults’ elasticity of demand for haircuts and let ηC represent children’s elasticity of demand.a. Explain why |ηΑ| and |ηC| must both be greater than 1.b. Find a formula for ηA in terms of ηC.c. What is the largest possible value for |ηΑ|? A monopoly barber sells haircuts to adults for 30 and
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