Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 12, Problem 6QP
To determine
Explain price regulation, profit regulation, and output regulation.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
Complete the sentence.
A perfect price discriminating monopoly produces _______.
Review the graph at right.
Monopoly
100-
What is the unregulated monopoly price? $ (enter your response as a whole
number)
90-
MC
What is the unregulated monopoly output? (enter your response as a whole
80
number)
70-
P=$00
60-
The total unregulated welfare (CS + PS) is $- (round your answer to the nearest
penny)
50-
40
What is the optimal monopoly regulated price? $ (enter your response as a
whole number)
MCE$30
30-
20
The total regulated welfare (CS + PS) is $. (round your answer to the nearest
penny)
FQ=30 MR
50 60 70 80 90 100
Quantity
10
20 30
40
20
tv
MacBook Air
80
DII
DD
F2
F3
F4
F6
F7
F8
F9
F10
F11
@
%23
2$
2
3
4
8
{
W
E
Y
U
P
S
D
F
G
н
J
K
>
C
V
N
M
and
command
opti
.. .-
• V
B
An unregulated natural monopoly bottles Mt. McKinley air, unique clean air that has no substitutes. The
monopoly's total fixed cost is $30,000 a year and its marginal cost is 10 cents a can.
The graph illustrates the demand for Mt. McKinley air.
Draw the average total cost curve. Plot the four control points at the quantities 100,000, 200,000,
300,000, and 400,000. Label the curve.
Draw a point at the new quantity and price if the regulator sets a price cap such that the monopoly
breaks even.
The number of cans produced
sold
its marginal cost.
A. is; benefit; exceeds
B. is not; benefit; exceeds
OC. is not; revenue; is greater than
D. is; revenue; equals
the efficient quantity because the marginal
from the last can
60-
50-
40-
30-
20 20
10-
Price (cents per can)
0-
ATC
MC
D
$300
100
200 300 400
Quantity (thousands of cans per year)
>>> Draw only the objects specified in the question.
500
Knowledge Booster
Similar questions
- A natural monopoly is most likely to occur in which of the following industries? Group of answer choices a. the pharmaceutical industry because the development and approval of new drugs through the Food and Drug Administration can take more than 10 years b. the diamond mining and marketing industry because one firm can control a key resource c. the software industry because of the importance of network externalities d. an industry where fixed costs are very large relative to variable costsarrow_forwardDifferent between the monopoly market and perfect competition market. Define in a well manner.arrow_forwardReview the graph at right. What is the unregulated monopoly price? $60 (enter your response as a whole number) What is the unregulated monopoly output? (enter your response as a whole number) The total unregulated welfare (CS+PS) is $. (round your answer to the nearest penny) What is the optimal monopoly regulated price? S response as a whole number) (enter your The total regulated welfare (CS+ PS) is $ (round your answer to the nearest penny) Price 100- 90- 80- 8 70- 60 50 40 30- 20 PHS00 MC $30 104 Okt 0 Monopoly QMR ++ 10 20 30 40 50 60 70 80 90 100 Quantity MC C Qarrow_forward
- MC - ATC 30- D 300 1200 Unita of output, Q Label A Label B Label C MC = ATC 30- D Dollars ($) Dollars ($)arrow_forwardReview the graph at right. Monopoly 100- What is the unregulated monopoly price? $ (enter your response as a whole number) MC 90- What area represents the consumer surplus for an unregulated monopolist? 80- 70- P= $60 60 What area represents the producer surplus for an unregulated monopolist? A, B, & C - What area represents the deadweight loss? 50- 40- D MC = $30 30- The welfare for the unregulated monopoly is V the welfare when optimal monopoly regulation is used. 20- 10- Q = 3OMR ó 10 20 30 40 50 60 70 80 90 100 Quantity 0- DEC dtv A 20 MacBook Air DII F11 F10 F4 F2 F3 & %23 %24 7 8. 3 4 { P Q W E R Y F G J K L A S D > C V M command option on command .. .- リ • V * COarrow_forwardWhat are the three reasons why monopolies arise? Give one example of a firm that is a monopoly and the reason why it is a monopoly.arrow_forward
- Writing at least 400 words, give an example of a government-created monopoly. Is creating this monopoly necessarily bad public policy? Explain.arrow_forwardExplain how demand is seen by a pure monopoly.arrow_forwardWhat are the characteristics of a monopoly market . Please explain in detail.arrow_forward
- How a profit-maximizing monopoly chooses output and price. Explain with examples.arrow_forwardWhat are the necessary conditions for a monopoly position in the market to be established?arrow_forwardLook at this graph: Do you notice that the profit maximizing point for this monopoly: Marginal Revenue Marginal Cost lies below demand (price). What does this mean? Price ($) Step 3. Identify profit Step 2: Look at demand curve to see what price to change Q M Quantity Marginal cost -Step1 MR = MC Marginal revenue Average cost Demandarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning