Which of these is NOT a characteristic of monopoly? O potential for long-run economic profit O no barriers to entry O substantial control over price O a single seller
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- Suppose the local electrical utility, a legal monopoly based on economies of scale, was split into four films of equal size, with the idea that eliminating the monopoly would promote competitive pricing of electricity. What do you anticipate would happen to prices?Draw the demand curve, marginal revenue, and marginal cost curves from Figure 9.6, and identify the quantity of output the monopoly wishes to supply and the price it will charge. Suppose demand for the monopolys product increases dramatically. Draw the new demand me. What happens to the marginal revenue as a result of the increase in demand? What happens to the marginal cost curve? Identify the new profit-maximizing quantity and price. Does the answer make sense to you? Figure 9.6 Illustrating Profits at the HealthPill MonolpolyFrom the graph you drew to answer Exercise 11.6, would you say this transit system is a natural monopoly? Justify. Use the following information to answer the next three questions. In the years before wireless phones, when telephone technology requited having a wile matting to every home, it seemed plausible that telephone service had diminishing average costs and might require regulation like a natural monopoly. For most of the twentieth century, the national U.S. phone company was AT&T, and the company functioned as a regulated monopoly. Think about the deregulation of the U.S. telecommunications industry that has occurred over the last few decades. (This is not a research assignment, but a thought assignment based on what you have learned in this chapter.)
- Suppose demand for a monopolys product falls 50 that its profit-maximizing price is below average variable cost. How much output should the film supply? Hint: Draw the graph.How can a monopolist identify the profit-maximizing level of output if it knows its total revenue and total cost curves?Draw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the monopolists profit-maximizing output level. Now, think about a slightly higher level of output (sayQ0+1). According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?
- ystem (Academic) Mes of Microeconomics || Fall20 Suppose a monopolist's costs and revenues are as follows. ATC = S50, MC = $35; MR = $40; P $55. The firm should of Select one: O a. decrease output and increase price. tion O b. increase output and decrease price. O c not change output or price. O d. shut down. Next page s page 00 HUAWEI Nova 3 Al CAMERAFor a single-price monopoly shown in the figure below, when its profit is maximized, output will be 95 19 15 45 65 MR MC ATC D 65 units per year and the price will be $15. O I choose to use one of my three skips on this question. O 45 units per year and the price will be $19. 65 units per year and the price will be $19. O 45 units per year and the price will be $15.The graph shows the average cost, marginal cost, demand, and marginal revenue curves for a monopoly firm. If the firm produces 45 units of output per day, it Price Average (dollars Marginal cost per unit) 10 cost 8 4 Demand Marginal revenue 10 20 30 40 45 Quantity (units per day) Select one: O a. will be maximizing profit. O b. will be able to increase profit by producing less per day. O c. will charge a price that exceeds its marginal cost. O d. will be able to increase profit by producing more per day.
- Why does a monopoly arise? O because of diseconomies of scale because entry to an industry is blocked because of elastic demand because firms want to maximize profitsTo regulate natural monopolies, the governments can choose amongst the following options: Select all that apply O A. Set the price to equal Average total cost O B. Set the price to equal Marginal Cost O C. Break the monopolies into several smaller companies O D. Set the price to equal total cost RAZER F10 F8 F3 F4 F5 FI F2 44K The following figure shows the revenue curves of a monopolist: Figure 11.6 5000 Price ($) 4000- 2500- 0 D. Average revenue MR: Marginal revenue O $500,000 200 O $300,000 O $350,000 O $250,000 In Figure 11.6, assume that marginal costs are constant at $2,500 and fixed costs are 0. What would be the amount of consumer surplus if the market was perfectly competitive? 400 O $1,000,000 MR Quantity 102°F Sunny