100908PRICE(Dollars per subscription)8708 8402010002MR46 8 10 12 14QUANTITY (Thousands of subscriptions)Complete the first row of the following table.Pricing MechanismProfit MaximizationMarginal-Cost PricingAverage-Cost PricingSuppose the government has elected not to impose regulations on the industry, and so the firm faces no regulatory constraints in maximizing profits.16ATCO TrueO False18 20Complete the third row of the previous table.DShort RunPriceQuantity(Subscriptions) (Dollars per subscription)ProfitSuppose now that the government decides to require the monopolist to set its price equal to marginal cost.Long-Run DecisionComplete the second row of the previous table.Suppose now that the government decides to require the monopolist to set its price equal to average total cost.True or False: Over time, the electric company has a very strong incentive to lower costs when subject to average-cost pricing regulations.

Monopoly is a type of market structure that consists of only one single firm in the entire market or…

100 80 PRICE (Dollars per subscription) 8 8 8 8 8 70 10 0 02 4 6 10 12 14 16 QUANTITY (Thousands of subscriptions) Complete the first row of the following table. Pricing Mechanism Profit Maximization MR Suppose the government has elected not to impose regulations on the industry, and so the firm faces no regulatory constraints in maximizing profits. Marginal-Cost Pricing Average-Cost Pricing 18 20 True D Complete the third row of the previous table. False Short Run Price Quantity (Subscriptions) (Dollars per subscription) Suppose now that the government decides to require the monopolist to set its price equal to marginal cost. Profit Complete the second row of the previous table. Suppose now that the government decides to require the monopolist to set its price equal to average total cost. Long-Run Decision True or False: Over time, the electric company has a very strong incentive to lower costs when subject to average-cost pricing regulations.

100 80 PRICE (Dollars per subscription) 8 8 8 8 8 70 10 0 02 4 6 10 12 14 16 QUANTITY (Thousands of subscriptions) Complete the first row of the following table. Pricing Mechanism Profit Maximization MR Suppose the government has elected not to impose regulations on the industry, and so the firm faces no regulatory constraints in maximizing profits. Marginal-Cost Pricing Average-Cost Pricing 18 20 True D Complete the third row of the previous table. False Short Run Price Quantity (Subscriptions) (Dollars per subscription) Suppose now that the government decides to require the monopolist to set its price equal to marginal cost. Profit Complete the second row of the previous table. Suppose now that the government decides to require the monopolist to set its price equal to average total cost. Long-Run Decision True or False: Over time, the electric company has a very strong incentive to lower costs when subject to average-cost pricing regulations.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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TC 50 TR 40 30 20 10 10 15 20 25 30 Quantity (units per day) 34) The figure above shows a monopoly's total revenue and total cost curves. The monopoly's economic profit is positive if it produces between A) 0 and 20 units. B) 5 and 20 units. C) 0 and 15 units. D) 0 and 5 units. Total revenue and total cost (dollars per day)
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20 10 MRI 8 10 12 14 16 QUANTITY (Thousands of subscriptions) 18 20 Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints. Complete the first row of the folowing table. Short Run Quantity Price Pricing Mechanism (Subscriptions) (Dollars per subscription) Profit Long-Run Decision Profit Maximization Marginal-Cost Pricing Average-Cost Pricing Suppose that the government forces the monopolist to set the price equal to marginal cost. Complete the second row of the previous table. Suppose that the government forces the monopolist to set the price equal to average total cost. Complete the third row of the previous table. Under average-cost pricing, the government will raise the price of output whenever a firm's costs increase, and lower the price whenever a firm's costs decrease. Over time, under the average-cost pricing policy, what will the local telephone company most likely do? Work to decrease its costs O…
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