Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Question
Chapter 9, Problem 5SQP
To determine
Explain the reason for a single seller who is likely to emerge in the long–run.
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Students have asked these similar questions
Suppose the average cost of producing a kilowatt hour of electricity is lower for one firm than for another firm serving the same market. Without the government granting a franchise to one of these competing power utilities, explain why a single seller is likely to emerge in the long run.
How do you find the profit maximizing PRICE (not level of output) on a graph for a monopoly with demand, marginal revenue, marginal cost, and average total cost curves.
Group of answer choices
Find the minimum point on the ATC curve and go straight over to the price axis.
Find the point where MR = MC and go straight over to the price axis.
Find the point where MR = MC, go straight up until you hit the demand curve, and then go straight over to the price axis.
Find the point where demand hits marginal cost and go straight over to the price axis.
What happens if a perfectly competitive industry becomes
a monopoly?
Suppose the demand curve in the figure is market demand and the
corresponding market supply curve represents the marginal cost of
production.
Compared to perfect competition, a profit-maximizing monopoly
would decrease output by 2 units. (Enter your response as
an integer)
In addition, a monopoly would lower price by $12
Price and cost per unit
20-
18-
10-
14-
12-
10-
8-
8-
4-
2
SMC
D
G
MR
2
°
10 12 14 10
18
20
Quantity
Chapter 9 Solutions
Micro Economics For Today
Ch. 9.1 - Prob. 1GECh. 9.1 - Prob. 2GECh. 9.2 - Prob. 1YTECh. 9.4 - Prob. 1YTECh. 9 - Prob. 1SQPCh. 9 - Prob. 2SQPCh. 9 - Prob. 3SQPCh. 9 - Prob. 4SQPCh. 9 - Prob. 5SQPCh. 9 - Prob. 6SQP
Ch. 9 - Prob. 7SQPCh. 9 - Prob. 8SQPCh. 9 - Prob. 9SQPCh. 9 - Prob. 10SQPCh. 9 - Prob. 11SQPCh. 9 - Prob. 12SQPCh. 9 - Prob. 13SQPCh. 9 - Prob. 1SQCh. 9 - Prob. 2SQCh. 9 - Prob. 3SQCh. 9 - Prob. 4SQCh. 9 - Prob. 5SQCh. 9 - Prob. 6SQCh. 9 - Prob. 7SQCh. 9 - Prob. 8SQCh. 9 - Prob. 9SQCh. 9 - Prob. 10SQCh. 9 - Prob. 11SQCh. 9 - Prob. 12SQCh. 9 - Prob. 13SQCh. 9 - Prob. 14SQCh. 9 - Prob. 15SQCh. 9 - Prob. 16SQCh. 9 - Prob. 17SQCh. 9 - Prob. 18SQCh. 9 - Prob. 19SQCh. 9 - Prob. 20SQ
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Similar questions
- Price (dollars per unit) 600 400 AC = MC De mand Marginal revenue 200 400 Computers (units per day) The graph above shows the average cost, marginal cost, demand, and marginal revenue curves for selling computers in a given market. The computer industry is currently perfectly competitive and in equilibrium. Suppose all firms in the industry are taken over by a single firm that establishes a monopoly in the market. Assuming the monopoly maximizes profit, Select one: there will be no effect on the price of computers. Ob. the price of computers will increase from $400 to $600, but there will be no change in quantity demanded. Oc. the price of computers will be set equal to the marginal cost of computers. O d the price of computers will increase from $400 to $600, and the quantity demanded will fall from 400 to 200 per day.arrow_forwardUsing an example (not Amazon), explain the different characteristics of a monopoly. Explain how these characteristics apply to the example you have chosen and how they differ from the assumptions of perfect competition.arrow_forwardConsider a firm, Shamrock Ink, that has some monopoly power in the market for green ink pads. The demand for their green ink pads is P = 2500 – 2.5Q with an associated marginal revenue of MR= 2500 – 5Q. Where Q is thousands of ink pads. Their marginal cost of producing green ink pads is MC = 20Q. In order to maximize profit, Shamrock Ink should produce thousand ink pads and charge a price of $ (Round answers to two decimals if necessary.)arrow_forward
- The government has announced its plans to license two firms to serve a market whose demand curve is given by P= 72-1Q The technology is such that each can produce any given level of output at zero cost, but once each firm's output is chosen, it cannot be altered. Instructions: Round your answers to the nearest penny (2 decimal places). a. What is the most you would be willing to pay for one of these licenses if you knew you would be able to choose your level of output first (assuming your choice was observable by the rival firm)? Skipped b. How much would your ival be willing to pay for the right to choose second?arrow_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. 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)arrow_forwardWhich of the following are characteristics of a monopoly market? (Check all that apply.) In the short run, positive economic profit possible P > MC at the profit maximizing quantity In the long run, positive economic profit possible In the short run, only zero economic profit possible V Significant barriers to entry In the long run, firms operate at the minimum of the ATC curve MR = MC at the profit maximizing quantity UEasy entry/exit OP = MC at the profit maximizing quantity In the long run, only zero economic profit possiblearrow_forward
- M2arrow_forwardExplain fully why perfectly competitive firms and monopolies maximize profits by choosing the quantity where MR = MC. Explain why the profit maximizing price of the monopoly can be higher or lower than the profit maximizing price for perfect competition.arrow_forwardexplain what happens to a monopoly firm operating in the long-run.arrow_forward
- One of the sources of Monopoly market power is their Economies of Scale. What will happen when diseconomies of scale exist?arrow_forwardSuppose that econometricians at Hallmark Cards determine that the price elasticity of demand for greeting cards is -2. a. If Hallmark's marginal cost of producing cards is constant and equal to $1.00, use the Lerner index to determine what price Hallmark should charge to maximize profit. b. Hallmark hires you to estimate the price elasticity of demand faced by its archrival, American Greetings. Hallmark estimates that American's marginal cost of producing a greeting card is $1.22. You note that American's cards sell for an average of $3.25. Assuming that American Greetings is maximizing profit, calculate their price elasticity of demand.arrow_forwardThe demand curve facing a firm in a monopolistically competitive market is more elastic than one facing a pure monopoly. True or False? Why?arrow_forward
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