Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 14, Problem 3CQQ
To determine
The relationship between fixed cost and profit.
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Students have asked these similar questions
If a monopoly’s fixed costs increase, its price will_________ and its profit will _________.a. increase; decreaseb. decrease; increasec. increase; stay the samed. stay the same; decrease
The following graph shows demand, MR, and cost curves for a monopoly in the
short run:
12
11
SMC
10
ATC
8
AVC
2
1
10 20 30 40 50 60 70 80 90 100 110 120
Output
MR
a. Profit is maximized at a price of $–
b. The profit-maximizing level of output is
c. At the optimal level of output, total revenue is $-
and profit is $-
total cost is $-
d. If the manager mistakenly sets price at $10 and sells 20 units, will profit margin (i.e.,
P - ATC) be larger or smaller than when price is set at the optimal level in part c?
(Note: Average total cost is $8.75 when 20 units are produced.) Using marginal anal-
ysis, explain why this happens.
Price, marginal revenue, and cost (dollars)
What are examples of ways in which a firm can have a monopoly?
A. Patents
B. Natural Monopoly
C. Trademarks
D. A and B
E. A, B, and C
Chapter 14 Solutions
Essentials of Economics (MindTap Course List)
Ch. 14.1 - Prob. 1QQCh. 14.2 - Prob. 2QQCh. 14.3 - Prob. 3QQCh. 14.4 - Prob. 4QQCh. 14.5 - Prob. 5QQCh. 14 - Prob. 1CQQCh. 14 - Prob. 2CQQCh. 14 - Prob. 3CQQCh. 14 - Prob. 4CQQCh. 14 - Prob. 5CQQ
Ch. 14 - Prob. 6CQQCh. 14 - Prob. 1QRCh. 14 - Prob. 2QRCh. 14 - Prob. 3QRCh. 14 - Prob. 4QRCh. 14 - Prob. 5QRCh. 14 - Prob. 6QRCh. 14 - Prob. 7QRCh. 14 - Prob. 8QRCh. 14 - Prob. 1PACh. 14 - Prob. 2PACh. 14 - Prob. 3PACh. 14 - Prob. 4PACh. 14 - Prob. 5PACh. 14 - Prob. 6PACh. 14 - Prob. 7PACh. 14 - Prob. 8PACh. 14 - Prob. 9PACh. 14 - Prob. 10PACh. 14 - Prob. 11PACh. 14 - Prob. 12PA
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Similar questions
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- Review the graph at right for a monopoly market (enter all of your responses as whole numbers). Price 100- 90- MC How much is the consumer surplus? $ 80 70- 160 60- 50- 40- 30 30- 20- 10- MR 40 50 60 Quantity 0- 80 90 tv 80 esc F1 F2 F3 F4 F5 F6 F7 FR 2$ % & 1 4 7 8 Q W E R T Y tab A S つ caps lock C V B ift fn control option command つ エarrow_forwardOne difference between a competitive firm and a monopoly is that __________________. a. monopoly makes economic profits, but a competitive firm never makes economic profits b. a monopoly faces a downward sloping marginal revenue curve, whereas a competitive firm faces a horizontal marginal revenue curve c. the cost curves of a monopoly are always below those of a competitive firm d. a monopoly always has economies of scale, but a competitive firm always has diseconomies of scalearrow_forwardPlz do the both questions. Which of the following statements is true about a monopoly?O.A. there are no barriers to entryO.B. they earn positive economic profits in the short run onlyO.C. they produce a good that has close substitutesO.D. none of the abovearrow_forward
- QUESTION 3 The following figure represents an unregulated single- price monopoly. MC ATC MR 6 8 10 12 Quantity (units per year) What is the output and price where its profit is maximised? A) The output will be 4 units per year and the price will be $6. B) The output will be 6 units per year and the price will be $4. C) The output will be 4 units per year and the price will be $4. D) None of the above answers is correct. Price and costs (dollars per unk) 2.arrow_forward3 13 out of question The graph below shows the demand, revenue and cost curves for a monopoly operating in the short run. Use the graph to answer the questions that follow: Price and costs (dollars per unit) 5 4 3 لیا 2 0 20 MC 40 MR 60 80 100 120 Quantity (units per day) What is the consumer surplus given change from monopoly to perfect competitor? ATC Darrow_forwardWhen a monopoly is producing profit-maximizing quantity, what is the relationship between marginal cost and price? a Marginal cost is greater than the price. b Marginal cost is equal to the price. c Marginal cost is less than the price.arrow_forward
- Why does a monopoly arise? O because of diseconomies of scale because entry to an industry is blocked because of elastic demand because firms want to maximize profitsarrow_forwardBelow you have the demand schedule and the total cost information for a Monopoly.a. Complete the table. Quantity Price (WTP) Total Cost MC MR ATC TR Profit 0 16 2 — — — — 1 14 3 2 12 5 3 10 8 4 8 12 5 6 17 6 4 23arrow_forward1. Draw a graph of a typical natural monopoly with declining costs. a. Label monopoly price and quantity. Identify the area of deadweight loss when the monopoly chooses the profit-maximizing level of output. b. Label marginal cost price and quantity. i. How will the area of deadweight loss be impacted with marginal cost pricing? ii. What are the drawbacks to this approach? c. Label fair return price and quantity. What are the pros and cons of fair return pricing? d. What is incentive regulation? What are the positive and negative impacts of this strategy?arrow_forward
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