Economics:
10th Edition
ISBN: 9781285859460
Author: BOYES, William
Publisher: Cengage Learning
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Chapter 25, Problem 6E
To determine
To compute:
The total profit when the
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Use the cost and revenue data to answer the questions.
Quantity Price Total Revenue Total Cost
10
90
15
80
20
70
25
60
30
50
35
40
900
1200
1400
1500
1500
1400
675
825
1025
1250
1500
1850
What is marginal revenue when quantity is 25?
What is marginal cost when quantity is 15?
If this firm is a monopoly, at what quantity will profit
be maximized?
If this is a perfectly competitive market, which quantity will
be produced?
$ 20
$
90
Incorrect
quantity: 6
Incorrect
quantity: 8
Incorrect
Also explain why a monopoly firm, choose not to produce at its full capacity?
How does monopoly affect society’s well-being?
What is price discrimination and how it helps the firm and the consumers
Suppose that Comcast has a cable monopoly in Philadelphia. The following table gives Comcast's demand and costs per month for subscriptions to basic cable (for simplicity, we keep the
number of subscribers artificially small).
Price
51
48
45
42
Quantity
3
4
5
6
7
8
Total
Revenue
153
192
225
252
273
288
Marginal
Revenue
A. Comcast should produce 6 units in the short run and shut down in the long run.
O B. Comcast should shut down in the short run and produce 6 units in the long run.
C. Comcast should shut down in the short run and in the long run.
O D. Comcast should produce 6 units in the short run and in the long run.
O E. None of the above.
39
33
27
21
15
Total
Cost
108
129
153
180
210
243
Marginal
Cost
-
21
24
27
30
33
39
36
Suppose the local government imposes a $73 per month tax on cable companies. What will Comcast do? (Assume fixed costs equal $45.)
Suppose that the flat per-month tax is replaced with a tax on the firm of $12 per cable subscriber. (Assume that Comcast will sell…
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- 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_forwardPrice (Dollars per Garment) 7 D E 5 АС-МC Demand Marginal Revenue 20 Garments cleaned per year (millions) The long run average and marginal cost of dry-cleaning services is $5, as shown in the graph. Given the demand curve and the marginal revenue curve shown in the graph, which of the following is true? Select one: O . If the industry were served by a profit-maximizing monopoly, the price of dry-cleaning services would be $7 per garment. Ob. If the industry were perfectly competitive, 10 million garments would be cleaned each year. If the market were served by a profit-maximizing monopoly, the price of dry-cleaning services would be $5 per garment and monopoly economic profit would be zero. O d. If the industry were perfectly competitive then the long-run equilibrium price of dry-cleaning services would be $7 per garment.arrow_forwardThere are 1000 competitive firms of the size represented by AC1, and AC2 represents the only firm if there were a monopoly. In the figure below, how much less does an unregulated monopoly produce compared to a perfectly competitive industry? Price $70 $60 $50 $40 A B C D Same 20b fewer units 30b fewer units 40b fewer units X 50b fewer units MC, AC, Qi-50m MC, AC AC -MC Quantity Price MR Your answer MC JAC D 30b 40b 50b 60b Quantityarrow_forward
- Answer the following question based on the graph below, which is for Blue Smooth Yoga Mats Ltd. one of 50 small firms operating in the industry. Price, costs 90 15 75 60 60 45 30 15 0 D MR AC MC 125 250 375 500 625 750 875 1000 1251250 Quantity per period a. What is the profit-maximizing output? Output: b. What price will the firm charge? Price: $ c. How much excess capacity exists at the output in (a)? Excess capacity:arrow_forwardUse the cost and revenue data to answer the questions. Quantity Price Total revenue Total cost 10 90 900 675 15 80 1200 825 20 70 1400 1025 25 60 1500 1250 30 50 1500 1500 35 40 1400 1850 If the firm is a monopoly, what is marginal revenue when the quantity is 25? MR= What is the marginal cost when quantity is 15? MC= If this firm is a monopoly, at what quantity will marginal profit be $0.00? Quantity= If this is a perfectly competitive market, which quantity will be produced? Quantity=arrow_forwardWhat 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 Carrow_forward
- Use the diagram below to determine the price and quantity for a. a perfectly competitive, profit-maximizing industry? b. a profit-maximizing monopoly?arrow_forwardWhat are the main differences between a perfectly competitive market and a monopoly.arrow_forwardIs number 1 a monopoly, oligoploy or perfectly competitive market?arrow_forward
- Help me answer these review questions. Fill in the Blanks For a monopoly, the firm’s demand curve is downward sloping, therefore to maximize its profit, the firm must produce where its marginal cost equals _____________. When marginal product is increasing, the total product is increasing at _______________. If the average product is greater than the marginal product the next average product will _____________.arrow_forwardOver a recent family dinner, your Aunt Trudy expresses her disdain for price discriminating monopoly businesses, to which you, having taken some economics reply, "A perfect price discriminating monopoly may convert all of the consumer surplus to monopoly profit, but at least it produces O A. more output than a competitive industry would produce. OB. the same output that a competitive industry would produce. C. at the minimum of its average total cost (ATC) curve. D. where its marginal cost (MC) curve is still declining.arrow_forwardQuestion 1: Revenue and costs MC $34 ATC 29 50 27 21 13 Demand MR 600 800 940 1160 Quantity Assume this is a monopoly. What is the market equilibrium output in this market? Question 2: Revenue and costs MC $34 ATC 29.50 27 21 13 Demand MR 600 800 940 1160 Quantity Assume the above graph is a monopoly. What is the deadweight loss if this firm maximizes profits? If there is no deadweight loss, put 0 in for your answer. Assume linearity.arrow_forward
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