EBK PRINCIPLES OF MICROECONOMICS (SECON
2nd Edition
ISBN: 9780393616149
Author: Mateer
Publisher: W.W.NORTON+CO. (CC)
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Question
Chapter 10, Problem 11SP
To determine
Explain the way in which Person D establishes a
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Students have asked these similar questions
What are the limitations of a monopoly?
Provide ONE example of a policy we can use
to address monopolies.
Use the graph to the right for a monopoly to answer the
questions.
What quantity will the monopoly produce, and what price
will the monopoly charge?
The monopoly will produce 84 units and charge $ 3.4
per unit. (Enter numeric responses using real numbers
rounded to two decimal places.)
Suppose the government decides to regulate this
monopoly and imposes a price ceiling of $2.60 (in
other words, the monopoly can charge less than $2.60
but can't charge more). Now what quantity will the
monopoly produce, and what price will the
monopoly charge?
The monopoly will produce units and charge $
unit.
per
...)
cost per unit
Price and
4.80-
4.40-
4.00-
3.60-
3.20-
2.80
2.40-
2.00-
1.60-
1.20-
0.80
0.40+
0-
0
MC
16 32 48 60 72 84 96 108 120 132 14.
Quantity
Question 5: Jimmy has a room that overlooks, from some distance, a major league baseball stadium. He decides to
rent a telescope for $50 a week and charge his friends and classmates to use it to peep at the game for 30 seconds. He
can act as a monopolist for renting out "peeps". For each person who takes a 30 second peep, it costs Jimmy $.20 to
clean the eyepiece. Jimmy believes he has the following demand for his service:
Price of
a Peep
$1.20
Quantity
of peeps demanded
1.00
90
100
150
200
250
300
70
60
50
350
40
30
400
450
20
10
500
550
a) For each price, calculate the total revenue from selling peeps and themarginal revenue per
peep.
Price
Quantity
TR
MR
$1.20
100
90
100
150
200
70
250
60
300
350
50
40
30
400
450
20
500
10
550
b) At what quantity will Jimmy's profit be maximized? What price will he charge? What will his total profit be?
c) Jimmy's landlady complains about all the visitors coming into the building and tells Jimmy to stop selling
peeps. Jimmy discovers, though, if he…
Chapter 10 Solutions
EBK PRINCIPLES OF MICROECONOMICS (SECON
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Similar questions
- What is the main issue in an monopoly Market. Is Google a monopoly?arrow_forwardGoogle dominates online search options and advertising. Some contend Google is a monopoly. First, consider competition and answer these questions: Is Google protected by a barrier to entry, and If so, which barrier(s)? Is there a viable substitute for Google? Second, consider whether Google is a monopoly or not. How does Google’s control of the market influence market price and market quantity? If Google is a monopoly, how would breaking up affect the market price and market quantity? How do we test these hypotheses?arrow_forwardExplain whether the following sentence makes Good Economic Sense: “The way to tell if a business has monopoly power is to count the number of substitutes for that business’s product.”arrow_forward
- Question 4: The Baxter brothers - Bob, Bill, Ben and Brad – have just made a documentary movie about their basketball team. They are thinking about making the movie available for download on the internet. They can act as a monopolist if they choose to do so. Each time the movie is downloaded, their Internet Service Provider charges them a fee of $4. The Baxter brothers are arguing about which price to charge the customer per download. Here is the demand schedule for their film: Quantity of Downloads Denanded Price of Download $10 4 6. 2 10 15 a) Calculate the total revenue and marginal revenue per download. Price Quantity TR MR $10 6. 3 10 15 b) Bill is proud of the film and wants as many people as possible to download it. What price would he choose? How many downloads would be sold? c) Bob wants as much total revenue as possible. What price would he choose? How many downloads would be sold? d) Ben wants to maximize profits. What price would he choose? How many downloads would be sold?…arrow_forwardWhat are the necessary conditions for a monopoly position in the market to be established?arrow_forwardEconomics Please type your NUMERICAL answer in the space below. ENTER ONLY THE NUMBER. IF answers are in decimals, please round the number to one decimal point. A monopoly has the following total cost function and demand functions TC=20Q P=400-Q. Suppose that monopoly decides to practice 2nd degree price discrimination, as follows: it charges $360 for the first 40 units of output and $320 for the next 20 units. What is monopoly's profit with 2nd degree price discrimination? a Profits= b. What is Consumer Surplus? CS= C. What is Deadweight Loss? DWL=arrow_forward
- Draw the graph. If the monopoly is a single price monopoly (usual monopoly, as in chapter 10), then: the monopoly produces a quantity Q = ______ where ________________ (which curves intersect?) the monopoly charges a price of P = ________ the consumer surplus is CS = ______ (identify the area on the graph and calculate it). the producer surplus is PS = _________(identify the area on the graph and calculate it). the deadweight loss of the monopoly (as compared to the perfect competition) is DWL = ______ (identify the area on the graph and calculate it).arrow_forwardDraw the graph. If the monopoly is a single price monopoly (usual monopoly, as in chapter 10), then: the monopoly produces a quantity Q = ______ where ________________ (which curves intersect?) the monopoly charges a price of P = ________ the consumer surplus is CS = ______ (identify the area on the graph and calculate it). the producer surplus is PS = _________ the deadweight loss of the monopoly (as compared to perfect competition) is DWL = ______arrow_forwardWhy is monopoly considered as a price maker?arrow_forward
- Is Facebook a natural monopoly or monopoly? Why or why not?arrow_forwardOn the monopoly graph, use the black points (plus symbol) to shade the area that represents the loss of welfare, or deadweight loss, caused by a monopoly. That is, show the area that was formerly part of total surplus and now does not accrue to anybody. Deadweight loss occurs when a market is controlled by a monopoly because the resulting equilibrium is different from the (efficient) competitive outcome. In the following table, enter the price and quantity that would arise in a competitive market; then enter the profit-maximizing price and quantity t would be chosen if a monopolist controlled this market. Market Structure Price (Dollars) Quantity (Gyros) Competitive Monopoly Given the summary table of the two different market structures, you can infer that, in general, the price is lower under a and the quantity is lower under aarrow_forwardIs Monopoly Efficient?arrow_forward
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