Econ Micro (book Only)
6th Edition
ISBN: 9781337408066
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 9, Problem 7P
To determine
The reasons for smaller or larger welfare loss of a
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(Figure: Short-Run Monopoly in the Market for Electricity) Use Figure: Short-Run Monopoly in the Market for Electricity. The marginal cost of producing the profit-maximizing quantity is:
Price and
cost
NOR
OP.
SON.
O O
O Q.
0
P
Q
runscript
RSTU
MC
MR
ATC
AVC
Demand
Quantity
(KWH per pound)
(Figure: Short-Run Monopoly) Look at the figure Short-Run Monopoly. If the firm is trying to maximize its profit, the per-unit profit is:
The difference between O and where ATC at output R.
The difference between N and where ATC at output R.
The difference between N and where AVC at output R.
N-P
(9) What a monopoly's ATC , Demand, MR and MC Looks like if the monopoly is operating with loss.
Chapter 9 Solutions
Econ Micro (book Only)
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- Figure: A Profit-Maximizing Monopoly Firm Price, marginal revenue, marginal cost, average total cost A) $5. OB) $13. C) $14. $35 D) $20. 29 26 రారాళి 8 5 0 (Figure: A Profit-Maximizing Monopoly Firm) Look at the figure A Profit-Maximizing Monopoly Firm. This firm's profit per unit is: MC ATC MR 160 220 250 300 Quantity of output (per week)arrow_forwardThe McDonald's table shows information you found out about McDonald’s production capabilities and costs when operating as a monopoly. ( fill it out the table) As a monopoly, how much should McDonald’s charge for its hamburgers to maximize profit? What could McDonald’s do to create barriers that would prevent others from entering the markets and would make it harder for remaining hamburger shops to remain in the market?arrow_forward2) A monopoly faces a demand elasticity of -10 and marginal cost of $2, what is the optimal monopoly price? (Calculate using the monopoly pricing formula) What is the Lerner index?arrow_forward
- (a) If you are the owner of the only bookstore in a small town, do you have a monopoly? Explain. (b) Draw graph and explain the inefficiency of a monopoly firm such as public sector provision of electricity.arrow_forwardQuestion 5 The following figure describes the market demand curve of a monopoly market: 10 Price, cost 9 8 7 6 3 2 1 a. b. C. d. 5 10 15 20 25 30 35 D a). 45 50 55 60 65 70 75 80 85 quantity Draw the marginal revenue (MR) curve for the monopoly given the above market demand curve. If the monopoly firm can produce any output level with the extra cost $3 per unit, how would the marginal cost (MC) curve be? List the mathematical equation and draw the MC curve on the same figure of question The fixed cost for the monopoly company is $25. Find the optimal output level and the related profit/loss for it. There are two proposals concerning the market efficiency: Plan A: regulate the market price at $4. Plan B: allow and help the monopoly enforce the perfect price discrimination. If you represent consumers to vote for one plan, which one would you choose? Explain with proper calculation (Hint: consumers only care about their welfare).arrow_forwardCOURSE: MICROECONOMICS - MONOPOLY We appreciate a perfect competition market where there is a predetermined limit number of firms with 20 total firms.Each has the cost function such that: CTi = qi2 + 4qi + 3 where qi indicates numbers of firms (i = 20) The demand in the market is: Q = 100 - 4pa) What is the individual supply of each firm? (answered)b) What is the supply of the whole industry? (answered)c) Obtain the market equilibrium (answered)In the case where a new firm intended to enter a monopolist's market:d) What kind of legitimate entry barriers can the firm face understanding the nature of the market it wishes to enter?e) What type of anticompetitive barriers could the firm already in the market present? NOTE: a), b) and c) for perfect competition have been already answered by a tutor; please answer d) and e) questionsarrow_forward
- (Figure: Demand, Revenue, and Cost Curves for Thneeds) Use Figure: Demand, Revenue, and Cost Curves for Thneeds. Thneeds and Things is a monopolist in the thneed ("things we need") market. If the government wants to regulate Thneeds so that an efficient outcome is reached, it would impose a price ceiling of: Price of thneeds $100 90 $40. $46. $50. $65. 80 70 60 50 40 30 20 10 0 20 MR D MC ATC 60 100 140 180 220 Quantity of thneedsarrow_forward19. A monopoly is a market in which there is only one seller. This situation hurts consumers (buyers). But how, precisely? Explain the things that a monopoly does that hurt consumers.arrow_forwardQ5. The graph below represents a monopoly firm. Answer the questions below. ( a. Briefly explain three ways in which pricing can be set with a regulated monopoly and the intended objective of each pricing method.b. Based on the diagram, if this monopoly firm is unregulated, what will be its profit? Show your calculations.c. Based on the diagram, if this firm is regulated based on social interest theory, what will be its profit? Show and explain your calculations.d. Based on the diagram, if this monopoly is subject to rate of return regulation, what will be the new price, output and profit of the firm? Show your calculations with explanations.e. Based on the diagram, if this is a natural monopoly that is allowed to set its price, what will be the minimum it should set in order to make a profit or break even? Explain your answer.arrow_forward
- Consider this market. What would be the competitive price if this market wasn't a monopoly? Question 11 options: A B C Darrow_forwardQuestion 2 Alice is the monopoly producer for DrinkMeTM, a magical potion that makes you shrink in size. Market demand for this potion is given by p = 60- 3Q and Alice's costs of production are C(q) = 12q. Please calculate the following quantities. %3D a) Monopoly price, quantity and profits b) The fair market price in perfect competition c) The welfare loss which occurs due to the monopolyarrow_forwardQUESTION 19 An industry is a natural monopoly when a single firm can supply a good or service to an entire market at a larger cost than could two or more firms. True Falsearrow_forward
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