Answered: 1. A monopolist can earn above-normal…

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Economics

1. A monopolist can earn above-normal profit in the long-run. a. True b. False

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter13: Monopoly And Antitrust

Section: Chapter Questions

Problem 10P

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Question

1. A monopolist can earn above-normal profit in the long-run.

a. True

b. False

2. If a monopolist cannot make an above-normal profit, entry by other firms will occur.

a. True

b. False

3. A monopolist can charge whatever price it wants and, therefore, can reap phenomenal profits.

a. True

b. False

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How much profit would this monopolist earn?
Only one firm produces and sells San Francisco Giants baseball hats in the country of NoDodgers, and as the story begins, international trade in baseball hats is prohibited. The equations that describe the monopolist's demand, marginal revenue, total cost, and marginal cost are given by • Demand: P = 10 - Q. Marginal revenue: MR 10 - 2Q. • Total cost: TC = 3+Q+ ½ Q². Marginal cost: MC 1+Q. - = The monopolist produces type your answer... type your answer... baseball hats, which are sold at a price of $ type your answer... per hat. The monopolist's profit is $
Suppose 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.
7. A monopolist faces inverse demand p(Q) = 22 - 2Q and has total cost function TC(Q) = 2Q. a. Calculate the equilibrium price, quantity, consumer surplus, and producer surplus if the monopolist must charge all consumers the same price. b. Suppose instead that the monopolist can perfectly price discriminate among consumers. What are the price, quantity, consumer surplus, and producer surplus now? c. Alternatively, the monopolist decides to charge a two-part tariff. What lump sum fee and price per unit should the monopolist charge if consumers are homogeneous?
At an output of 1,000 units, a monopoly firm’s average revenue is $40, its marginal revenue is $30, its marginal cost is $30, its average variable cost is $35, and fixed costs are $5,000. Given this information, we can conclude that the monopolist: a. is earning zero economic profit. b. is earning an economic profit equal to $5,000. c. is making an economic loss and should shut down. d. should increase output to maximize profit.
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4.
Question No. 18 Refer to the Figure below. What price will the monopolist charge in order to maximize profit? 10 MC ATC 6. - AVC 3. MR 0 1 2 3 4 5 6 7 8 9 10 Quantity (units per day) Question No. 19 Refer to the above Figure in question 18. At the profit-maximizing what is price, output, and total revenue is? Question No. 20 Explain why only normal profit may be earned in the long run in perfect competition? Price(£ per unit)
• , The following figure shows the demand curve and the marginal revenue (MR) curve of a monopolist supplying petroleum. Price/Cost (S) Demand MR 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 Quantity (100 gallons) a) If the monopolist faces a constant marginal cost of $3, what is the optimal output that it should produce? b) If the monopolist faces a constant marginal cost of $3, at what price should it sell the optimal output? c) If the average total cost of the monopolist is $4 per liter when it produces the optimal output, determine his profit or loss.
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Refer to the Figure below. What price will the monopolist charge in order to maximize profit?
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