2. Monopolies are firms who dominate the market. A monopoly tends to set higher prices than a competitive market, leading to a lower consumer surplus. However, on the other hand, monopolies can benefit from economies of scale, leading to lower average costs, which can, in theory, be passed on to consumers. Distinguish between monopoly, pure monopoly and bilateral monopoly by providing specific support for your claim.

2. Monopolies are firms who dominate the market. A monopoly tends to set higher prices than a competitive market, leading to a lower consumer surplus. However, on the other hand, monopolies can benefit from economies of scale, leading to lower average costs, which can, in theory, be passed on to consumers. Distinguish between monopoly, pure monopoly and bilateral monopoly by providing specific support for your claim.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Which of the following will occur in a market characterized as a monopoly? a) The seller will take the market price as given and produce the quantity that maximizes profit at that price b) The seller may refuse to make specific profitable trades in order to maintain an overall higher price c) The seller will need to differentiate between their individual demand curve and the market demand curve when choosing price d) The seller may retaliate against competitors through price wars and advertising 2. Which market structure is characterized by a single price-searching firm that produces a unique good and is protected by high barriers to entry? a) Monopolistic Competition b) Perfect Competition c) None of these answers d) Oligopoly
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Fill in the blanks: 1. If the market price equals a firm’s break-even price, the firm earns its ________ profit. 2. For a monopoly, the firm’s demand curve is downward sloping, therefore to maximize its profit, the firm must produce where its marginal cost equals ________. 3. The competitive market’s demand curve is __________. sloping while that of the competitive firm is __________. 4. your firm has a price of $5, an average cost of $7, and an average variable cost of $4. in the short run, you should _________.
7. Regulating a natural monopoly Consider the local cable company, a natural monopoly. The following graph shows the monthly demand curve for cable services and the company's marginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves. 100 90 80 70 60 ATC A MC 10 MR D 10 12 14 16 18 20 QUANTITY (Thousands of subscriptions) Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits without constraints. PRICE (Dollars per subscription
Monopoly. A monopolist sells to a population of consumers with willingness to pay that is uniform between 5 and 10. That is: f1/5 if 5 <2< 10 S(w) = O else You can assume the amount of consumers is normalized to 1 like in class. The monopolist has constant marginal cost c.
(1) Can we consider WAPDA a government-created/state monopoly? Was creating WAPDA bad public policy? Explain. (2) Why is marginal revenue less than the price for monopolies? Can marginal revenue ever be negative? Explain. (3) Show the deadweight loss from unregulated monopolies. Explain your answer as it relates to WAPDA. (4) Describe in detail the Public Policy measures that the government can use to manage government-created/state monopolies like WAPDA.
19. 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.
Explain why it is not possible for a monopoly firm to maximise its profits by charging a price in the price region where demand is inelastic, even though there are no direct substitutes for its product. Also explain how a monopoly will be able to charge a higher price than a firm producing the good under perfect, oligopolistic, or monopolistic competition
1. A little town in the Midwest obtains all of its electricity from one company, Northstar Electric. Although the company is a natural monopoly, it is owned by the citizens of the town, all of whom split the profits equally at the end of each year. The CEO of the company claims that because all of the profits will be given back to the citizens, it makes economic sense to charge a monopoly price for electricity. True or False? Explain. Feel free to draw a graph to illustrate your answer.
part C and D
USUALLY THERE IS MORE THAN ONE !! ANSWER!!! Select the statements below that are consistent with the input choice decisions of profit-maximizing competitive firms and monopolies. Choose one or more: A. Monopolistic firms choose inputs of production at the point where the marginal revenue from each input equals the marginal cost. Competitive firms do not. B. Competitive firms choose inputs of production at the point where the marginal revenue from each input equals the marginal cost. Monopolies do not. C. For competitive firms, the marginal revenue product of an input equals the value of the marginal product. D. If the demand for a product is perfectly elastic, all else being equal, the optimal amount of an input of production is the same for a monopolist as it is for the competitive market as a whole. E. For a monopoly facing a downward-sloping demand curve, the marginal revenue product of an input equals the value of the marginal product. F. Competitive firms and monopolies choose…
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