Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 12, Problem 6DQ
To determine
The monopolistic competition and price fixing.
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Ignore AFC and AVC
2. Suppose a pure monopolist faces the following demand schedule and the same cost data as the competitive producer discussed in
problem 4 at the end of Chapter 10. Calculate the missing TR and MR amounts, and determine the profit-maximizing price and
profit-maximizing output for this monopolist. What is the monopolist's profit? Verify your answer graphically and by comparing total
revenue and total cost. LO11.4
Average
Total
Average
Variable
Average
Marginal
Product
Fixed Cost
Cost
Total Cost
Cost
0
$45
1
$60.00
$45.00
$105.00
40
2
30.00
42.50
72.50
35
3
20.00
40.00
60.00
30
4
15.00
37.50
52.50
35
5
12.00
37.00
49.00
40
6
10.00
37.50
47.50
45
7
8.57
38.57
47.14
55
8
7.50
40.63
48.13
65
9
6.67
43.33
50.00
75
10
6.00
46.50
52.50
Price Quantity Demanded Total Revenue Marginal Revenue
$115
83
63
55
48
42
29
2 % 522332
100
0
1
2
3
4
5
6
7
37
8
9
10
$
10. Is the demand for a life-saving drug like Daraprim
(Front Page Economics "Drugmaker Hikes Price of AIDS
Drug 5,000 Percent!") likely to be elastic or inelastic? How
does that affect the pricing decision of a monopolist?
LO10-1
IT qu
QUESTION 11
Suppose that a pure monopolist can sell 5 units of output at $4 per unit and 6 units at $3.90 per unit. The monopolist will produce and sell the sixth unit if its marginal
cost is:
O A. S4 or less
O B. $3.90 or less
O C. $3.50 or less
O D. S3.40 or less
Chapter 12 Solutions
Microeconomics
Ch. 12.4 - The MR curve lies below the demand curve in this...Ch. 12.4 - Prob. 2QQCh. 12.4 - Prob. 3QQCh. 12.4 - Prob. 4QQCh. 12 - Prob. 1DQCh. 12 - Prob. 2DQCh. 12 - Prob. 3DQCh. 12 - Prob. 4DQCh. 12 - Prob. 5DQCh. 12 - Prob. 6DQ
Ch. 12 - Prob. 7DQCh. 12 - Prob. 8DQCh. 12 - Prob. 9DQCh. 12 - 10. LAST WORD Using Big Data to set personalized...Ch. 12 - Prob. 1RQCh. 12 - Prob. 2RQCh. 12 - Prob. 3RQCh. 12 - Prob. 4RQCh. 12 - Prob. 5RQCh. 12 - Prob. 6RQCh. 12 - Prob. 7RQCh. 12 - Prob. 1PCh. 12 - Prob. 2PCh. 12 - Prob. 3PCh. 12 - Prob. 4PCh. 12 - Prob. 5P
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Similar questions
- The following diagram depicts the operating conditions for a profit-maximising monopolist. Calculate the deadweight loss created by this monopoly selling at the profit maximising point. Price ($) MC 10 Demand MR 5 7.5 10 Quantity (a) $4.25 (b) $6.25 (c) $8.25 (d) None of the above. 20 15 LO 20 15arrow_forwardPrice, cost, marginal revenue of diamond $1,000 800 ator 600 400 MC 200 -200 MR -400 20 8 10 Quantity of diamonds 16 Look at the figure The Profit-Maximizing Output and Price. Assume that there are no fixed costs and AC = MC = $200. The monopolist who can use price discrimination perfectly will produce an output of %3D %3D diamonds. O 20 0 6 О 16 O None of these options is correct.arrow_forwardWhich of the following statements regarding a profit-maximising monopolist is FALSE? O a. This firm might respond to a fall in demand by reducing both its output and its price. O b. This firm might respond to a fall in demand by reducing its output and increasing its price. O c. This firm would respond to a fall in the price of a variable input by increasing its output and reducing its price. d. This firm would respond to a fall in the price of a fixed input by increasing its output and reducing its price.arrow_forward
- Question 17 3아- MC ATC 26 27 26 25 24 AVC 20 MR 100 190 260 300 400 What is the optimal output and price for the prafit maximizing, nondiscriminating monopolist in the exhibit above? O 190 and $30 O 190 and $26 O 190 and $25 O 260 and $28 O 300 and $27 D Question 18 $/9 30- MC ATC 28 27 AVC 26 25 24 D. 2아 MR 100 190 260 300 400 Total cost for this nondiscriminating monopolist at its profit-maximizing output level in the exhibit above is O $7280 O $4750 $5700 None of the choices are correct O $4940 D Question 19 Why is collusian to raise prices highly unlikely among firms in perfectly competitive industries? O All the firms in competitive industries love their consumers too much to ever collude against them O There is only one firm in perfectly competitive industries, so whom would they collude with? • There are too many firms in perfectly competitive industries. O The products are too differentiated for collusion in perfectly competitive industries 3 This is a trick question because…arrow_forward3D. lon to Mathematical Economics i Iktisat(Ingilizce)(I.Ö) 2020-2021 Bahar If the demand function for a profit-maximizing monopolist is P = 32 - Q2 and MC = 8+ 6Q, what is the consumers' surplus? a. 3.33 O b. 5.33 O c. 4.33 O d. 6.33 yfa Sonraki sayfa mak için buraya yazınarrow_forwardWhich of the following statements is not correct? Select one: O a. A single price monopolist is more efficient than perfectly competitive market because it makes a larger profit. O b. A single price monopolist charges more than the competitive market. Oc A single price monopolist increases produces surplus at the expense of consumer surplus. Od. A single price monopolist produces less than the competitive market. Oe. A single price monopolist faces a downward sloping demand curve.arrow_forward
- If the demand function for a profit-maximizing monopolist is P = 26- Q² and MC =2+6Q, what is the consumers' surplus? O a. 6.33 O b. 4.33 O c. 3.33 O d. 5.33arrow_forwardSuppose that a monopolist faces linear demand given by Q(p)=90-3"p The monopolist also pays a marginal cost of $2 for each unit produced. What is the price that the monopolist will set to maximize its profits? O 16.5 O 15 O 16 O 15.5arrow_forwardThe accompanying diagram shows demand, marginal revenue, and marginal cost of a monopolist. $120 MC 110 100 90 80 70 60 50 40 30 20 10 MR 0+ Quantity o i 2 3 4 s6i s 9 10 11 12 13 14 is a) Determine the profit-maximizing output and price. b) What price and output would prevail if this firm's product was sold by price-taking firms in a perfectly competitive market? c) Calculate the deadweight loss of this monopoly. d) Suppose MC increases. How would this affect monopoly price and quantity? e) Suppose market demand became less price elastic (hint: became flatter). How does this affect monopoly price and quantity?arrow_forward
- Price (dollars) 30 27 24 21 18 15 12 9 O 3 units. O 5 units. O 4 units. Quantity demanded O 6 units. 0 1 2 3 4 5 6 7 Marginal revenue (dollars) 0 27 21 15 3 -3 -9 Total cost (dollars) 25 28 33 40 49 Using the data in the above table for a single-price monopolist, how many units of output will be produced? 60 73 88arrow_forwardAssuming that the monopolistic competitor faces the demand and costs depicted below and finds the profit maximizing level of output, what will be the firm's profit? 36 32 28 24 20 16 12 8 4 O O 1 O MC1 ATC₁ FAVC₁ Select one: O a. $8 b. $-32 c. $-64 d. $12 x Incorrect. The profit maximizing output is 4 units where Marginal cost equals marginal revenue. At that output, use the demand curve to find the price and calculate total revenue. At that output, use the average cost curve to find the average cost and calculate total cost. Then calculate profit = total revenue - total cost. MR1 D₁ 2 3 4 5 6 7 8 9arrow_forwardA monopolist has variable costs of VC = q² and no fixed costs and faces a demand curve of P = 24 - q, where P is price and q the quantity sold. What is the monopolist's profit? 072 O 64 None of the other answers is correct. O 48 O 36arrow_forward
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