Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 21, Problem 10DQ
To determine
The efficiency loss and tax incidence.
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Students have asked these similar questions
The figure on the right shows the demand schedule for a product produced by a
single-price monopolist.
Price ($)
9
8
0000
7
6
5
4
3
C. 5th unit
Quantity
demanded
What is the lowest level of output at which marginal revenue becomes negative?
OA. 6th unit
OB. 9th unit
D. 7th unit
OE. 8th unit
5
6
7
8
9
10
11
Price ($)
141
222 =26=LO
13-
12-
11-
10-
9-
8-
4-
2-
1-
45 6 7 8 9 10 11 12 13 14 15 16
Quantity
E
Table 15-20
A monopolist faces the following demand curve:
Quantity Price
0
$30
1
$27
2
3
+
$24
$21
$18
5
$15
6
7
8
0
$12
$9
$6
$3
10
$0
Refer to Table 15-20. If a monopolist faces a constant marginal cost of $5, how much output should the firm
produce in order to maximize profit?
O2 units
3 units
4 units
5 units
A local magic shop has a monopoly on the production of magic wands. Each customer wants only one magic
wand, and the table below shows each customer's willingness to pay. The marginal cost of producing a wand is
$21 no matter how many are produced.
Quantity demanded
Price per wand ($)
LO
01 2 3 4 5
6 78
30 27 24 21 18 15 12 96
If the shop can charge only a single price, it will charge $
wands.
If the firm practices perfect price discrimination, it will sell a total of
earn a profit of $|
and sell
wands and
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Similar questions
- Ignore AFC and AVC 2. Suppose a pure monopolist faces the following demand schedule and the same cost data as the competitive producer discussed in problem 4 at the end of Chapter 10. Calculate the missing TR and MR amounts, and determine the profit-maximizing price and profit-maximizing output for this monopolist. What is the monopolist's profit? Verify your answer graphically and by comparing total revenue and total cost. LO11.4 Average Total Average Variable Average Marginal Product Fixed Cost Cost Total Cost Cost 0 $45 1 $60.00 $45.00 $105.00 40 2 30.00 42.50 72.50 35 3 20.00 40.00 60.00 30 4 15.00 37.50 52.50 35 5 12.00 37.00 49.00 40 6 10.00 37.50 47.50 45 7 8.57 38.57 47.14 55 8 7.50 40.63 48.13 65 9 6.67 43.33 50.00 75 10 6.00 46.50 52.50 Price Quantity Demanded Total Revenue Marginal Revenue $115 83 63 55 48 42 29 2 % 522332 100 0 1 2 3 4 5 6 7 37 8 9 10 $arrow_forwardThe following diagram depicts the operating conditions for a profit-maximising monopolist. Calculate the deadweight loss created by this monopoly selling at the profit maximising point. Price ($) MC 10 Demand MR 5 7.5 10 Quantity (a) $4.25 (b) $6.25 (c) $8.25 (d) None of the above. 20 15 LO 20 15arrow_forward(Figure: Pay Per View Movies on Xfinity Cable) Use Figure: Pay Per View Movies on Xfinity Cable. The figure shows the demand and marginal revenue curves for on-demand movie rentals on Xfinity. Assume that marginal cost and average cost are constant at $20. If the cable company is a monopoly, how much producer surplus is there when the monopolist maximizes profit? Price, Costs, Marginal Revenue O $180 O $90 O $0 O $20 $100 90 80 70 60 50 40 30 20 10 0 MR 1 2 3 4 5 6 7 8 9 Quantity (Thousands of subscriptions)arrow_forward
- Suppose that demand is Qlp)-2000-4p. Consider the marginal revenue curve of a monopolist who operates in this market. Assume that it is plotted on a two-axis graph in which the horizontal axis measures quantities and the vertical axis measures marginal revenue. What is the horizontal intercept of the marginal revenue curve? O 500 O 750 O 1000 O 2000 O 250arrow_forward1. The table below represents the demand for Widgets, Inc., which has a monopoly in the sale of widgets. Calculate total revenue and marginal revenue for the levels of output given. Draw the demand curve and the marginal revenue curve in a same graph. Quantity 0 1 2 3 4 LO 5 Price $25 21 17 13 9 LO 5arrow_forwardA monopolist has variable costs of VC = q² and no fixed costs and faces a demand curve of P = 24 - q, where P is price and q the quantity sold. What is the monopolist's profit? 072 O 64 None of the other answers is correct. O 48 O 36arrow_forward
- Scenario 1: Barbara is a producer in a monopoly industry. Her demand curve, total revenue curve, marginal revenue curve, and total cost curve are given as follows: Q = 160 - 4P TR = 40Q- 0.25Q? MR = 40 - 0.5Q TC = 4Q MC = 4 Refer to Scenario 1. How much output will Barbara produce? O A. 56 O B. 22 O C. 72 O D. 0 E. None of the abovearrow_forwardLet the demand and cost curves for a monopolist be If the government imposes a price ceiling of $100 on the monopolist's price, what is the profit earned by the monopolist without and with the price ceiling? O No ceiling: $10,000 Ceiling: $0 O No ceiling: $10,000 Ceiling: $10,000 O No ceiling: $20,000 Ceiling: $10,000 Q = 1000 - 4P 20000 + 50Q TC O No ceiling: $20,000 Ceiling: $0arrow_forwardQuestion 17 3아- MC ATC 26 27 26 25 24 AVC 20 MR 100 190 260 300 400 What is the optimal output and price for the prafit maximizing, nondiscriminating monopolist in the exhibit above? O 190 and $30 O 190 and $26 O 190 and $25 O 260 and $28 O 300 and $27 D Question 18 $/9 30- MC ATC 28 27 AVC 26 25 24 D. 2아 MR 100 190 260 300 400 Total cost for this nondiscriminating monopolist at its profit-maximizing output level in the exhibit above is O $7280 O $4750 $5700 None of the choices are correct O $4940 D Question 19 Why is collusian to raise prices highly unlikely among firms in perfectly competitive industries? O All the firms in competitive industries love their consumers too much to ever collude against them O There is only one firm in perfectly competitive industries, so whom would they collude with? • There are too many firms in perfectly competitive industries. O The products are too differentiated for collusion in perfectly competitive industries 3 This is a trick question because…arrow_forward
- An industry with only one producer has a demand curve of P = 90-Q, with price in dollars and quantity in thousands. The monopolist's marginal cost curve is MC = 30 + 2Q. What is the deadweight loss of monopoly in this industry? O $100,000 O $37,500 O $72,667 $50,000arrow_forwardA monopolist has variable costs of VC = q² and faces a demand curve of P = 24 - q, where P is price and q the quantity sold. What is the deadweight loss if the monopolist engages in first-degree price discrimination? O $64 O $16 O $6 O $32 O $0arrow_forwardFigure: Maximum Willingness to Pay P $100 75 45 100 100 110 125 2 125 MR MC What is the profit-maximizing quantity for this monopolist? O 110 75 Darrow_forward
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