Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 13, Problem 23APA
(a)
To determine
(b)
To determine
Inefficiency in the market through regulating the dominant firm.
(c)
To determine
Efficiency under monopoly structure from selling to the highest bidder.
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Ilia is driving home from work. She needs to buy gas and notices an Exxon-Mobil station on one side of the street and a Shell station on the other side of the street. Although run by different companies, the two stations sell gasoline at the same price.
a. The most likely reason that the price is the same is that
_gas stations always make a profit, so they can charge any price they want.
_drivers need gas and are willing to pay whatever price a gas station charges.
_government regulation requires both gas stations to charge the same price.
_consumers view gasoline from different gas stations as perfect substitutes.
b. If one station increases its price,
_it will be fined by the government.
_it will sell more gasoline.
_it will make a higher profit.
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Figure: PPV
Price.
Costs, $100
Marginal 901
Revenue
80
70
60
50
40
30
20
10
0
MR
Quantity
(number of subscriptions)
(Ref 28-1 Figure: PPV) Use Figure 28-1: PPV. The figure shows the demand and marginal revenue for a pay-per-view football game on
cable TV. Assume that the marginal cost and average cost are a constant $20. If the cable company is a monopoly, how much will it
produce?
a.8
b.4
c.6
d.2
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
Chapter 13 Solutions
Macroeconomics
Ch. 13.1 - Prob. 1RQCh. 13.1 - Prob. 2RQCh. 13.1 - Prob. 3RQCh. 13.2 - Prob. 1RQCh. 13.2 - Prob. 2RQCh. 13.2 - Prob. 3RQCh. 13.2 - Prob. 4RQCh. 13.3 - Prob. 1RQCh. 13.3 - Prob. 2RQCh. 13.3 - Prob. 3RQ
Ch. 13.3 - Prob. 4RQCh. 13.4 - Prob. 1RQCh. 13.4 - Prob. 2RQCh. 13.4 - Prob. 3RQCh. 13.4 - Prob. 4RQCh. 13.5 - Prob. 1RQCh. 13.5 - Prob. 2RQCh. 13.5 - Prob. 3RQCh. 13.5 - Prob. 4RQCh. 13 - Prob. 1SPACh. 13 - Prob. 2SPACh. 13 - Prob. 3SPACh. 13 - Prob. 4SPACh. 13 - Prob. 5SPACh. 13 - Prob. 6SPACh. 13 - Prob. 7SPACh. 13 - Prob. 8SPACh. 13 - Prob. 9SPACh. 13 - Prob. 10APACh. 13 - Prob. 11APACh. 13 - Prob. 12APACh. 13 - Prob. 13APACh. 13 - Prob. 14APACh. 13 - Prob. 15APACh. 13 - Prob. 16APACh. 13 - Prob. 17APACh. 13 - Prob. 18APACh. 13 - Prob. 19APACh. 13 - Prob. 20APACh. 13 - Prob. 21APACh. 13 - Prob. 22APACh. 13 - Prob. 23APACh. 13 - Prob. 24APACh. 13 - Prob. 25APA
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