Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN: 9781305506725
Author: James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher: Cengage Learning
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Chapter 24, Problem 15CQ
To determine
Long run cost conditions in an industry.
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Students have asked these similar questions
Use the graph to answer the following 5 questions. A single priced unregulated monopolist faces the
demand curve and has the cost curves illustrated in the diagram below.
1. What is the profit
Price
maximizing quantity of
output?
70
a) 25 units.
b) 40 units.
c) 50 units.
d) 60 units.
60
e) 70 units.
f) 80 units
g) 90 units
Marginal Cost
50
2. What price does this
monopolist charge?
a) $58
b) $20
40
Average
Total
Cost
c) $35
d) $30
e) $45.
f) $50
30
g) $40
h) $38
3. What are the total profits?
a) $1200
b) $0
c) $1250
d) $200
e) $250.
f) $2250.
g) $150
h) $1600
20
10
Demand
20
40
60
80
100
120 140 160
Quantity
Identify and Graphically illustrate the similarities or differences between a perfectly competitive firm and a monopolist.
a. Compare the demand curve for a perfectly competitive firm and a monopolist.
b. Compare the price charged by a perfectly competitive firm and a monopolist.
c. Compare the amount of consumers’ surplus received by buyers under a monopoly with the amount received under perfect competition.
outline the monopolist profit rectangle. on the graph, label the price the monopolist will charge, the quantity the monopolist will produce, the TR and TC. Calculate the profit.
A profit-maximizing monopolist will charge a price of ___, produce a quantity of ___ units per hour, and earn a profit of ____?
Chapter 24 Solutions
Economics: Private and Public Choice (MindTap Course List)
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- I will rate and like, thank you! Easy economics question. Create graph that includes: Demand curve, marginal cost, and marginal revenue. Identify the profit-maximizing quantity and price for this monopolist. To do this you will need to determine marginal revenue at each level of output. Choose output that satisfies the monopolist’s profit maximizing condition of MR = MC. Does this firm earn a profit? How much profit if they do?arrow_forwardSuppose both a monopolist and a perfectly competitive firm charge a price corresponding to the quantity at the intersection of the marginal cost and marginal revenue curves. If this price is between each firm's average variable cost and average total cost curves, a. both firms will shut down in the short run. b. both firms will continue to operate in the short run. c. the perfectly competitive firm will continue to operate in spite of the loss but the monopolist will earn a profit. d. the perfectly competitive firm will continue to operate in the short run but the monopolist will shut down.arrow_forwarda. Draw the cost curves for a typical firm. Explain how a competitive firm chooses the level of output that maximizes profit. At that level of output, show on your graph the firm’s total revenue and total cost. b. Draw the demand curve, marginal revenue curve, average total cost curve, and marginal-cost curve for a monopolist. Show the profit-maximizing level of output, the profit-maximizing price, and the amount of profit. c. Why the demand curve for a firm operating in monopolistic competition is more elastic compared to the firm operating as a monopoly. Kindly answer all the sub parts.arrow_forward
- Answer the following questions on the basis of the monopolist’s situation illustrated in the following graph. Do not post a blank post or gibberish to open discussions. Your first post will be graded as the answer to the question. a. At what output rate and price does the monopolist operate? b. In equilibrium, approximately what is the firm’s total cost and total revenue? c. What is the firm’s economic profit or loss in equilibrium? Graph attached*arrow_forwardUse the data on the chart for a monopolist. At its profit-maximizing output, this firm's price will exceed its marginal cost by ________ and its average total cost by ________.arrow_forwardWhich one of the following is the best description of a monopolist? a.a firm that is the sole producer of a product for which there are no good substitutes in a market with high barriers to entry b.a firm that is the sole producer of a narrowly defined product class, such as yellow, grade-A butter produced in Wisconsin c.a firm that is large relative to its competitors d.a firm that produces a single productarrow_forward
- For a monopolist to produce one more unit of output, Select one: a. the price must be equal to the marginal cost b. the difference of total revenue gained and total revenue lost must be greater than zero c. the price must be equal to the average variable cost. d. demand must be in the in inelastic range of the demand curve e. the difference of the price and marginal revenue must be equal to zeroarrow_forwardThe accompanying diagram depicts a monopolist whose price is regulated at $10 per unit. Use this figure to answer the questions that follow. a. What price will an unregulated monopoly charge?$ b. What quantity will an unregulated monopoly produce?unitsc. How many units will a monopoly produce when the regulated price is $10 per unit?unitsd. Determine the quantity demanded and the amount produced at the regulated price of $10 per unit. Is there a shortage or a surplus?Quantity demanded: units Amount produced: unitsThere is: (Click to select) a shortage neither a shortage nor a surplus a surplus .e. Determine the deadweight loss to society (if any) when the regulated price is $10 per unit.$ f. Determine the regulated price that maximizes social welfare. Is there a shortage or a surplus at this price?$ There is (Click to select) neither a surplus nor a shortage a surplus a shortage at this price.arrow_forwardAnswer the following questions on the basis of the monopolist’s situation illustrated in the following graph. a. At what output rate and price does the monopolist operate? b. In equilibrium, approximately what is the firm’s total cost and total revenue? c. What is the firm’s economic profit or loss in equilibrium?arrow_forward
- a. Why is a monopolist’s marginal revenue less than the price of its good? Can marginal revenue ever be negative? Explain. b. Draw the demand, marginal-revenue, average total-cost, and marginal-cost curves for a monopolist. Show the profit-maximizing level of output, the profit-maximizing price, and the amount of profit. c. Describe the two problems that arise when regulators tell a natural monopoly that it must set a price equal to marginal cost.arrow_forwardComparing Monopoly to Competitor. In each case, circle the one that is greater. Output: Monopolist / Competitor Price: Monopolist / Competitor Profit: Monopolist / Competitorarrow_forwardSuppose the table below presents the demand schedule of the sole medicine manufacturer in the country. The marginal and average cost of the monopolist is constant at 5. Quantity Price 10 1 8 3 7 4 7 8. 6. 10 What is the profit maximizing quantity and price? Please show how you got your answer. 6 4.arrow_forward
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