Microeconomics (7th Edition)
7th Edition
ISBN: 9780134737508
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 15, Problem 15.2.7PA
To determine
The relevance of copyright.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
A patent gave Sony a legal monopoly to produce a robot dog called Aibo ("eye-BO"). The Chihuahua-size pooch robot
can sit, beg, chase balls, dance, and play an electronic tune. When Sony started selling the toy in July 1999, it
announced that it would sell 3,000 Aibo robots in Japan for about $2,000 each and a limited litter of 2,000 in the United
States for $2,500 each. Suppose that Sony's marginal cost of producing Aibos is $500. Its inverse demand curve is
P₁ = 3500-0.5Q
in Japan and
Pa = 4500-Qa
in the United States.
Solve for the equilibrium prices and quantities (assuming that U.S. customers cannot buy robots from Japan).
The equilibrium quantity in Japan is 3000 and the price, p, is $ 2000. (round your answers to the nearest integer)
The equilibrium quantity in the U.S. is 2000 and the price, p, is $ 2500 (round your answers to the
nearest integer)
Show how the profit-maximizing price ratio depends on the elasticities of demand in the two countries. I
Pl 2,000 1+1/a 1+1/
Pa…
Explain whether the following sentence makes Good Economic Sense: “The way to tell if a business has monopoly power is to count the number of substitutes for that business’s product.”
A patent gave Sony a legal monopoly to produce a robot dog called Aibo ("eye-BO"). The Chihuahua-size pooch robot can sit, beg, chase balls, dance, and play an electronic tune. When
Sony started selling the toy in July 1999, it announced that it would sell 3,000 Aibo robots in Japan for about $2,000 each and a limited litter of 2,000 in the United States for $2,500 each.
Suppose that Sony's marginal cost of producing Aibos is $500. Its inverse demand curve is
Pj = 3500 - 0.5Qj
in Japan and
Pa = 4500 - Qa
in the United States.
Solve for the equilibrium prices and quantities (assuming that U.S. customers cannot buy robots from Japan).
The equilibrium quantity in Japan is 3000 and the price, pj, is $ 2000. (round your answers to the nearest integer)
The equilibrium quantity in the U.S. is 2000 and the price, pa, is $ 2500. (round your answers to the nearest integer)
Show how the profit-maximizing price ratio depends on the elasticities of demand in the two countries.
Pj
Pa
1+1/a
2,000…
Chapter 15 Solutions
Microeconomics (7th Edition)
Ch. 15 - Prob. 15.1.1RQCh. 15 - Prob. 15.1.2RQCh. 15 - Prob. 15.1.3PACh. 15 - Prob. 15.1.4PACh. 15 - Prob. 15.1.5PACh. 15 - Prob. 15.1.6PACh. 15 - Prob. 15.2.1RQCh. 15 - Prob. 15.2.2RQCh. 15 - Prob. 15.2.3RQCh. 15 - Prob. 15.2.4RQ
Ch. 15 - Prob. 15.2.5PACh. 15 - Prob. 15.2.6PACh. 15 - Prob. 15.2.7PACh. 15 - Prob. 15.2.8PACh. 15 - Prob. 15.2.9PACh. 15 - Prob. 15.2.10PACh. 15 - Prob. 15.2.11PACh. 15 - Prob. 15.2.12PACh. 15 - Prob. 15.2.13PACh. 15 - Prob. 15.3.1RQCh. 15 - Prob. 15.3.2RQCh. 15 - Prob. 15.3.3RQCh. 15 - Prob. 15.3.4PACh. 15 - Prob. 15.3.5PACh. 15 - Prob. 15.3.6PACh. 15 - Prob. 15.3.7PACh. 15 - Prob. 15.3.8PACh. 15 - Prob. 15.3.9PACh. 15 - Prob. 15.3.10PACh. 15 - Prob. 15.4.1RQCh. 15 - Prob. 15.4.2RQCh. 15 - Prob. 15.4.3PACh. 15 - Prob. 15.4.4PACh. 15 - Prob. 15.4.5PACh. 15 - Prob. 15.4.6PACh. 15 - Prob. 15.4.7PACh. 15 - Prob. 15.5.1RQCh. 15 - Prob. 15.5.2RQCh. 15 - Prob. 15.5.3RQCh. 15 - Prob. 15.5.4PACh. 15 - Prob. 15.5.5PACh. 15 - Prob. 15.5.6PACh. 15 - Prob. 15.5.7PACh. 15 - Prob. 15.5.8PACh. 15 - Prob. 15.5.9PACh. 15 - Prob. 15.5.10PACh. 15 - Prob. 15.5.11PACh. 15 - Prob. 15.5.12PACh. 15 - Prob. 15.5.13PACh. 15 - Prob. 15.1CTECh. 15 - Prob. 15.2CTECh. 15 - Prob. 15.3CTE
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- A patent effectively allows a firm to operate as a monopoly while the patent is in effect. Some people argue that the market power created by patents harms consumers and shouldn't be granted. Others argue that patents are needed to encourage research and innovation. You can read the article from Forbes to learn more about the history and policy surrounding patents. Classify the arguments below as either arguments for patents or arguments against patents. Arguments For Patents Arguments Against Patents Answer Bank prevents free-riding encourages higher prices for consumers prevents competition in the market research results in a positive externality for society leads to an ineffient level of productionarrow_forwardOn the monopoly graph, use the black points (plus symbol) to shade the area that represents the loss of welfare, or deadweight loss, caused by a monopoly. That is, show the area that was formerly part of total surplus and now does not accrue to anybody. Deadweight loss occurs when a market is controlled by a monopoly because the resulting equilibrium is different from the (efficient) competitive outcome. In the following table, enter the price and quantity that would arise in a competitive market; then enter the profit-maximizing price and quantity that would be chosen if a monopolist controlled this market. Market Structure Price (Dollars) Quantity (Gyros) Competitive Monopoly Given the summary table of the two different market structures, you can infer that, in general, the price is higher under a and the quantity is lower under aarrow_forwardDeBeers has a monopoly on the production of diamonds. Use the following graph showing the demand, MR and cost curves of DeBeers to answer the questions below. How many carats of diamonds does DeBeers produce to maximize its annual profit? What price does it charge? How much annual profit does it make? If DeBeers was producing at the allocatively efficient level of output, how many carats of diamonds would it produce? What price would it charge? Suppose that the government decided to regulate DeBeers monopoly and imposes a price ceiling of $50 per carat of diamonds. How many carats of diamonds would DeBeers produce? What price would it charge? What profit would it make?arrow_forward
- What is a monopoly? Why do we not think monopolies are good in economics, even if they are very profitable? Can you give an example of a monopoly?arrow_forwardThe following graph shows the demand, marginal revenue, and marginal cost curves for a single-price monopolist that produces a drug that helps releve arthritis pain. Place the grey point (star symbol) in the appropriate location on the graph to Indicate the monopoly outcome such that the dashed lines reveal the profit-maximizing price and quantity of a single-price monopolst. Then, use the green rectangle (triangle symbols) to show the profits earned by the monopolist. 10 Manapaly Outcome Manapaly Profits 4 MC = ATC 1. MR Damand 3 4 QUANTITY (Millians of dasas par yaar) 5 6 10 1 2 6 8 Suppose that should the patent on this particular drug explre, the market would become perfectly competitive, with new firms Immedlately enterling the market with essentially Identical products. Further suppose that In this case the original firm will hire lobbylsts and make donations to several key politicians to extend Its patent for one more year. The firm Is prepared to spend up to $ million to extend…arrow_forwardThe three graphs below illustrate the market for electricity. The distribution of electricity is a natural monopoly; therefore, to take advantage of lower production costs, it is efficient to have only one firm in the market. Unfortunately, if a monopoly were allowed to provide electricity, it would charge a higher price and provide a smaller amount of electricity than would be desirable. In other words, the unregulated monopoly would charge the monopoly's profit-maximizing price. To avoid this, the government will allow a single firm to provide electricity, but the government will regulate the price. Let’s compare possible regulatory solutions.arrow_forward
- Why is monopoly considered as a price maker?arrow_forwardDraw the graph for a monopoly earning a positive economic profit. Suppose the government institutes a per unit tax on the good produced by the monopoly (consider the impact it will have on the cost curves). On the graph, show how this will affect the monopoly’s profit maximizing level of output and the price charged by the monopoly. Draw and Label Price Axis, Quantity Axis, Demand Curve, Marginal Revenue Curve, Marginal Cost Curve, Average Total Cost Curve, New Marginal Cost Curve, New ATC Curve, Qm, MR=MC, MR=MC1 Qm1, Pm, Pm1, ATC point, ATC1 point, Deadweight Loss, Total Revenue, Total Cost, Profitarrow_forwardWhat quantity will the above monopolist produce if it can first degree price discriminate? (Enter a number) How much consumer surplus do consumers get in the above graph if the monopolist first degree price discriminates? (Enter a number) If the monopolist first degree price discriminates, will the quantity produced by the monopolist be allocatively efficient? (Enter: YES or NO)arrow_forward
- Question 4: The Baxter brothers - Bob, Bill, Ben and Brad – have just made a documentary movie about their basketball team. They are thinking about making the movie available for download on the internet. They can act as a monopolist if they choose to do so. Each time the movie is downloaded, their Internet Service Provider charges them a fee of $4. The Baxter brothers are arguing about which price to charge the customer per download. Here is the demand schedule for their film: Quantity of Downloads Denanded Price of Download $10 4 6. 2 10 15 a) Calculate the total revenue and marginal revenue per download. Price Quantity TR MR $10 6. 3 10 15 b) Bill is proud of the film and wants as many people as possible to download it. What price would he choose? How many downloads would be sold? c) Bob wants as much total revenue as possible. What price would he choose? How many downloads would be sold? d) Ben wants to maximize profits. What price would he choose? How many downloads would be sold?…arrow_forwardBob, Bill, Ben, and Brad Baxter have just made a documentary movie about their basketball team. They are thinking about making the movie available for download on the internet, and they can act as a single-price monopolist if they choose. Each time the movie is downloaded, their internet service provider charges them a fee of $6. The accompanying table shows the demand schedule for their film. Price of download Quantity of downloads 10 2 3 4. 8 12 20 The marginal revenue per download when price changes from $6 to $4 is 0 3 O-1 O Need more information to tell. O 2 O 0.667arrow_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
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage Learning
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Environmental Law: The Clean Air Act; Author: LawShelf;https://www.youtube.com/watch?v=1-SH3kJpVA4;License: Standard Youtube License