1. (Figure 9.7) The levels of producer surplus under monopoly and perfect competition are Price (S) 100- 90- 80- 70- 60- 50- 40 30- 20- 10- 0 $800; $0 $600; $200 $1,200; $0 $800; $400 10 20 MR 30 40 MC D 50 Quantity and , respectively

1. (Figure 9.7) The levels of producer surplus under monopoly and perfect competition are Price (S) 100- 90- 80- 70- 60- 50- 40 30- 20- 10- 0 $800; $0 $600; $200 $1,200; $0 $800; $400 10 20 MR 30 40 MC D 50 Quantity and , respectively

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

5. Monopoly outcome versus competition outcome Consider the daily market for hot dogs in a small city. Suppose that this market is in long-run competitive equilibrium with many hot dog stands in the city, each one selling the same kind of hot dogs. Therefore, each vendor is a price taker and possesses no market power. The following graph shows the demand (D) and supply (S = MC) curves in the market for hot dogs.
21. Having discovered the secret to leprechauns' magic, you establish Lepre-Gone, the only producer of a leprechaun-eliminating spray. According to the graph, what is the deadweight loss caused by Lepre-Gone's monopoly? P Lepre-Gone $150 125 100 75 50 25 AC MC MR Demand 100 200 300 400 500 600 Q a. $10,000.00 b. $7,500.00 c. $5,000.00 d. $2,500.00
Solve all questions compulsory..
8. Fill in the blanks: Suppose that a monopoly faces the following demand schedule. It costs the monopoly $3 to produce every unit of output and it had FC = $4. P $10 $9 $8 $7 $6 $5 $4 Q 1 3 4 5 6. 7 The firm's optimal quantity is and its optimal price is
3. Suppose the minimum efficient scale of an industry is at 100 units of output. At this point, average cost equals 50. Inverse demand for this industry is: P(Q) = A - Q a) What range of values should A take on in order for this industry to exhibit the structure of a natural monopoly? b) At what value of A the industry in part (b) stops being a natural monopoly?
5
2. Monopoly, Practice Question Firm P is a monopolist for a new drug that makes people feel thinner. the total cost function is C(Q) = 200 + 10Q + Q² The inverse demand function is p(Q) = 82 - Q (a) By how much do revenues increase if this firm sells one more (small) unit of output? By how much does its cost go up if it produces one more (small) unit of output? (b) What is the optimal price and quantity the monopolist should charge and sell? (c) What is the profit the monopolist makes? Should the firm shut down in the short or long run? (d) If the company increases its price by a small fraction (let us say 1%), by what proportion does demand go down? [Round to two decimal places.] (e) What percentage of the price is due to costs and what is due to markup? [Round to two decimal places.] (f) What is the deadweight loss of the monopoly pricing compared to competitive prices?
Question 3 The demand curve facing a monopoly firm is: O A. equivalent to the market demand curve. B. horizontal at the market equilibrium price. C. non-existent D. equivalent to the firm's marginal cost curve.
4
4. (5 points) Price 110- 100- 90 80- 70 60 50 40 30 20- 10 0. MR MC=AC Quantity 00 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Based on the above graph (which summarizes the demand, marginal revenue, and relevant costs for your product), determine your firm's optimal price and output and profit for each of the following scenarios: (a) You engage in two-part pricing. (b) You engage in block pricing. 5. (5 points) Assume a case of price discrimination where a movie theater owner charges $16 from members of the public and $10 from students. Assume that at these prices, 200 members of the public and 300 students purchased tickets. The capacity of the theater is 500 and there are no additional people who might want to go the movie theater. $16 is the maximum price the public are willing to pay for the tickets, and $10 is the maximum price students are willing to pay for the tickets. Assume that the government made such price discrimination illegal (currently that is not the case) and therefore…
9. If a firm is able to set price, A) it is a monopoly.B) its marginal revenue is constant.C) it sells its output at a constant price.D) it faces a downward-sloping demand curve.