Economics (Book Only)
12th Edition
ISBN: 9781285738321
Author: Roger A. Arnold
Publisher: Cengage Learning
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Chapter 24, Problem 6QP
To determine
The condition in which
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Students have asked these similar questions
The figure shows the market demand curve for penicillin, an antibiotic medicine. Initially, the
market was supplied by perfectly competitive firms. Later, the government granted the exclusive
right to produce and sell penicillin to one firm. The figure also shows the marginal revenue curve
(MR) of the firm once it begins to operate as a monopoly. The marginal cost is constant at $3.
irrespective of the market structure.
After the market changes from perfect competition to a monopoly..
OA. social surplus decreases
OB. consumer surplus increases.
OC. deadweight loss decreases
OD. the market price decreases
-COD-
Price/Cost (5)
10
9
10
20
30
MR
40 60 00
Demand
70
BO
so Quanety
(units)
We’ve observed that there are few examples of perfectly competitive markets in the real world, yet we use the model of perfect competition as a comparison with other market structures. Can you think of any examples of monopoly in the real world?Describe something you believe could possibly called a monopoly and explain why it fits the characteristics of a monopoly.
Is your example a true, unregulated monopoly? (For example, Microsoft has been called a monopoly, but it is not the sole producer of computer operating systems, so strictly speaking it’s not a monopoly.)
If there are few true monopolies, what can we learn from studying that market structure?
Currently, the apple business is very competitive. However, suppose that the Koch Brothers buy up all the apple farms, turning the apple business in to a monopoly. What is the most likely impact?
Chapter 24 Solutions
Economics (Book Only)
Ch. 24.1 - Prob. 1STCh. 24.1 - Prob. 2STCh. 24.1 - Prob. 3STCh. 24.3 - Prob. 1STCh. 24.3 - Prob. 2STCh. 24.3 - Prob. 3STCh. 24.3 - Prob. 4STCh. 24.5 - Prob. 1STCh. 24.5 - Prob. 2STCh. 24.5 - Prob. 3ST
Ch. 24 - Prob. 1VQPCh. 24 - Prob. 2VQPCh. 24 - Prob. 3VQPCh. 24 - Prob. 4VQPCh. 24 - Prob. 5VQPCh. 24 - Prob. 1QPCh. 24 - Prob. 2QPCh. 24 - Prob. 3QPCh. 24 - Is there a deadweight loss if a firm produces the...Ch. 24 - Prob. 5QPCh. 24 - Prob. 6QPCh. 24 - Prob. 7QPCh. 24 - Prob. 8QPCh. 24 - Prob. 9QPCh. 24 - Prob. 10QPCh. 24 - Prob. 11QPCh. 24 - Prob. 12QPCh. 24 - Prob. 13QPCh. 24 - Prob. 14QPCh. 24 - Prob. 1WNGCh. 24 - Prob. 2WNGCh. 24 - Prob. 3WNGCh. 24 - Prob. 4WNGCh. 24 - Prob. 5WNGCh. 24 - Prob. 6WNG
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Similar questions
- Comparing a perfectly competitive market to a monopoly, which of the following is true? Group of answer choices Price will be higher than marginal cost in the perfectly competitive market but will beequal to marginal cost in the monopoly. Price will be equal to marginal revenue in the perfectly competitive market but will behigher than marginal revenue in the monopoly. at that point on the market demand curve which intersects the marginal cost curve. Price will be higher and quantity will be lower in the perfectly competitive market than inthe monopoly.arrow_forwardA firm faces a market demand curve given by: P = 100 - Q. Assume that the firm has a total cost given by: TC = Q2 - 60Q + 1,000. What are the price quantity combination that maximizes profit? Calculate the following in case of Perfect Monopoly and Perfect Competition? compare your results? a. What output level should the firm produce to maximize profit? b. What is the profit maximization price (P) for this firm? c. What is the firm's profit? d. What is the Consumer Surplus?arrow_forwardThe MR curve of a perfectly competitive firm is (Click to select) and the MR curve of a monopoly firm is (Click to select)arrow_forward
- Explain in stepsarrow_forwardSuppose that the demand curve for a good is P = 100 – 2Q. The marginal cost curve of a firm in the industry is given by MC = 3Q. Calculate and compare the equilibrium price and quantity under monopoly and perfect competition.arrow_forwardSuppose a perfectly competitive industry can produce a product with total cost TC = Q? and the market demand for the product is given by Q = 120 - Suppose that the same market can be served by a monopolist operates with the same cost and demand functions. How does the consumer surplus change due to monopoly relative to perfect competition? It falls by 2000 It does not change It falls by 1600 It falls by 1200arrow_forward
- please do the graphs and the questions. the choices for the two questions in the end are (monopoly, perfectly competitive market) thank youarrow_forwardThe figure shows the market demand curve for penicillin, an antibiotic medicine. Initially, the market was supplied by perfectly competitive firms Later, the government granted the exclusive right to produce and sell penicillin to one firm. The figure also shows the marginal revenue curve (MR) of the firm once it begins to operate as a monopoly. The marginal cost is constant at $3, irrespective of the market structure What is the surplus enjoyed by the firm when it is the sole supplier of the medicine? OA. 590 OB. $180 OC. $30 OD. $60 Price/Cost (5) 10 1 10 20 30 40 MR Demand 50 60 70 80 90 Quantity (units)arrow_forwardShow in stepsarrow_forward
- Below is the demand schedule for wholesale pallets of ice cream. Assume that the marginal cost of supplying a wholesale pallet of ice cream is a flat $40 per pallet. Price Quantity Total Revenue Total Cost Profit $100 40 $90 50 $80 60 $70 70 $60 80 $50 90 $40 100 First, complete the table above for TR, TC, and profit. If this were a competitive industry, where P=MC, what would be the price and quantity of wholesale ice cream? If ice cream were supplied instead by a profit-maximizing monopoly, what would be the price and quantity? If Ben and Jerry were to form a collusive duopoly for the production of ice cream, what would be the price and industry quantity? If Ben and Jerry split the market in d. evenly, what would be the output and profit for each of them? What if Ben were to cheat on the cartel and produce a higher output by 10 pallets: What is Ben’s resulting output…arrow_forwardUsing graphs, describe how price and output decisions are made under:a) Perfect competitionb) Monopoly Describe the concept of economic profit and how such profits can occur under each of the markets described abovearrow_forwardWhat is the number of firms in a Perfect Competition and what is the price control of product by individual firms.arrow_forward
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