EBK MICROECONOMICS
13th Edition
ISBN: 8220106798652
Author: Arnold
Publisher: CENGAGE L
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Chapter 12, Problem 7QP
To determine
Explain the reason why profit regulation leads to increase the cost of the regulated firms.
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Why might profit regulation lead to rising costs for the regulated firm?
What would be evidence of serious competition between firms in an industry?
How does monopoly effect the pharmaceutical industry?
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- P, MR, AC, MC B A Demand G | JH MC AC MR Quantity a) Identify the quantity of output the monopoly wishes to supply and the price it will charge. b) Suppose demand for the monopoly's product increases dramatically shifting it to the right. Using the new demand curve determine what happens to the marginal revenue as a result of the increase in demand? Assuming that the marginal cost curve stays the same. how will the new profit-maximizing quantity and price change?arrow_forwardWhy does monopoly need to be regulated?arrow_forwardIs price discrimination considered as fair business practice. Why do companies tends to sell commodity to different buyers at different prices?arrow_forward
- explain what happens to a monopoly firm operating in the long-run.arrow_forwardSelect one or two examples of an industry characterized by monopoly and discuss how each example conforms to the definition of a monopoly?arrow_forwardWhat are the objectives of regulators? Under what conditions is regulation most likely to raise welfare?arrow_forward
- Is the insulin market considered as a monopoly? How and Why?arrow_forwardUse the cost and revenue data to answer the questions. Quantity Price Total revenue Total cost 10 90 900 675 15 80 1200 825 20 70 1400 1025 25 60 1500 1250 30 50 1500 1500 35 40 1400 1850 If the firm is a monopoly, what is marginal revenue when the quantity is 25? MR= What is the marginal cost when quantity is 15? MC= If this firm is a monopoly, at what quantity will marginal profit be $0.00? Quantity= If this is a perfectly competitive market, which quantity will be produced? Quantity=arrow_forwardHow was De Beers able to control the world price of diamonds over the past several decades even though it produced only 45 percent of the diamonds? What factors ended its monopoly? What is its new profit strategy?arrow_forward
- Should the government regulate monopolies? If yes, outline the economic implications and process of regulation.arrow_forwardEconomic theory leads to the conclusion that an unregulated market that is controlled by a monopoly will lead to an inefficient outcome. Discuss how this conclusion has influenced U.S. policy with respect to regulation of business.arrow_forwardWhy might a service business be more selective than a goods-producingbusiness regarding the customers it pursues or accepts?arrow_forward
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