Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134421315
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 13, Problem 1.1P
To determine
Relevance of
Expert Solution & Answer
Explanation of Solution
The fact that Person V has the only 7-Eleven convenience store in the town does not mean this represents a monopoly. There may be other competitors in the town; for instance, other convenience stores such as Race T, Circle K, and so forth. There is also a possibility that the customers could drive to a different 7-Eleven convenience store in a nearby town.
Economics Concept Introduction
Monopoly: Monopoly is a market structure where there is only one seller of a good or service that does not have a close substitute.
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Students have asked these similar questions
Is the insulin market considered as a monopoly? How and Why?
You are the manager of a monopoly, and your analysts have estimated your demand and cost functions as P = 300 − 3Q and C(Q) = 1,500 + 2Q2, respectively.
a. What price-quantity combination maximizes your firm’s profits?
Price:
Quantity:
b. Calculate the maximum profits.
$
c. Is demand elastic,
inelastic
unit elastic
Elastic
d. What price-quantity combination maximizes revenue?
Price:
Quantity:
e. Calculate the maximum revenues.
$
f. Is demand elastic, inelastic, or unit elastic at the revenue-maximizing price-quantity combination?
multiple choice
Elastic
Unit elastic
Inelastic
Describe the concept of price elasticity? Why it is for a monopoly less profitable to act inmarkets with high price elasticity?
Chapter 13 Solutions
Principles of Microeconomics, Student Value Edition Plus MyLab Economics with Pearson eText -- Access Card Package (12th Edition)
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Similar questions
- Provide an example of a product or service that operates as a monopoly. Explain your answer. What barrier to entry helped create this monopoly?arrow_forwardGiven the following information for a monopoly firm: Demand: P = 80 - 5(Q) Marginal revenue: MR = 80 - 10(Q) Marginal cost: MC = 2(Q) + 8 Average total cost at equilibrium is 30 1. At what output (Q) will this firm maximize profit? Number 2. At what price (P) will this firm maximize profit Number 3. What is the total revenue (TR) earned at this output level Number 4. What is the total cost (TC) accrued at this output Number Number 5. What profit is earned Assume this firm is to be regulated. Answer the following questions: 6. Under the Marginal Cost Pricing,what is the optimal quantity Number 7. Under the Marginal Cost Pricing,what is the optimal price Numberarrow_forwardFrom our textbook and in your own words, define what a monopoly is. In your response, address the following: What are some disadvantages and advantages of a monopoly compared to brand competition? Is there a trend toward consolidation in some markets, and if so, what does that mean to you, the consumer? What is better for you, the consumer, monopoly, or brand competition? Please use current research in your response. Here are some ideas that might help you get started. Ninety-two percent of the prescription drugs sold in the United States come from just three wholesalers. Coke owns over 200 brands, including names like Schweppes, Dr. Pepper, Fanta, and Powerade. Nestle owns over 2,000 brands. Hospital consolidation has.arrow_forward
- In 2015, Apple introduced the Apple Watch. Assume that the cost of producing the 38mm Apple Watch Sport was $73. The price was $363. What was Apple's price/marginal cost ratio? What was its Lerner Index? If Apple is a short-run profit-maximizing monopoly, what elasticity of demand did Apple believe it faced? Apple's price/marginal cost ratio was 4.97. (Enter your response rounded to two decimal places.) The value of Apple's Lerner Index (L) was 80. (Enter your response rounded to two decimal places.) Apple's elasticity of demand (e) is. (Enter your response rounded to two decimal places and include a minus sign.) Assume rice/marc t elasticity ter your re Assume tha pple's price/ dtv 13 MacBook Air 80 F9 F7 esc FS F3 F4 F1 F2 & @ #3 2$ 4 7 8. 1 2 W E Y U Q tab K A S F caps lock C shift fn control option command * 00 B >arrow_forwardThe graph shows the relevant curves for a natural monopoly. Assume that in regulating this monopoly, policy makers have directed the firm to follow an average cost pricing rule, where there is a regulated fair-return price. What is the firm's profit? If the firm is losing money, express the loss as a negative number. Round to the nearest penny. Price ($) 36.9 31.6 25.9 22.6 18.5 16.7 15.2 11.7 10.3 Marginal revenue 11.1 16.5 29.5 Average cost Marginal cost Demand 37.5 Quantity $arrow_forwardSuppose the local electrical utility, a legal monopoly based on economies of scale, was split into four firms of equal size, with the idea that eliminating the monopoly would promote competitive pricing of electricity. What do you anticipate would happen to prices?arrow_forward
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