3. Label axes and all curves in the diagram below representing a monopoly. a. Show the quantity Qm and price Pm the monopoly will choose to maximize the monopoly profit. b. Show the quantity Qc and price Pc the monopoly would choose if it behaved as competitive firm.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
Please answer question 3 a and b from the images below.
1. Consider a market with demand D: P = 2,050 – 75Q that is served by a
monopoly. The structure of the monopolistic firm's costs is given in the table
below. Calculate missing values.
a. Graph the fixed, variable and total cost curves.
b. Graph the marginal, average variable and average total cost curves.
b.
VC
FC
TC
AVC
AFC
АТС
MC
0.00
3,780.00
NA
NA
NA
NA
1
400.00
2
700.00
3
900.00
4
1,000.00
5
1,050.00
1,200.00
7
1,400.00
8
2,000.00
2,700.00
9.
10
4,000.00
2. Graph the market demand and the monopoly marginal revenue MR. Recall
that the marginal revenue of the monopoly has slope that is two times
greater (in absolute value) than the demand curve.
a. Find the profit maximizing quantity Qm monopoly chooses to produce.
b. Find the monopoly price Pm.
c. Calculate monopoly economic profit.
d. Show that the monopoly produces inefficiently.
e. Show the price Pc and quantity Qc the firm would produce if it behaved as
a competitive firm.
3. Label axes and all curves in the diagram below representing a monopoly.
a. Show the quantity Qm and price Pm the monopoly will choose to maximize
the monopoly profit.
b. Show the quantity Qc and price Pc the monopoly would choose if it behaved
as competitive firm.
Transcribed Image Text:1. Consider a market with demand D: P = 2,050 – 75Q that is served by a monopoly. The structure of the monopolistic firm's costs is given in the table below. Calculate missing values. a. Graph the fixed, variable and total cost curves. b. Graph the marginal, average variable and average total cost curves. b. VC FC TC AVC AFC АТС MC 0.00 3,780.00 NA NA NA NA 1 400.00 2 700.00 3 900.00 4 1,000.00 5 1,050.00 1,200.00 7 1,400.00 8 2,000.00 2,700.00 9. 10 4,000.00 2. Graph the market demand and the monopoly marginal revenue MR. Recall that the marginal revenue of the monopoly has slope that is two times greater (in absolute value) than the demand curve. a. Find the profit maximizing quantity Qm monopoly chooses to produce. b. Find the monopoly price Pm. c. Calculate monopoly economic profit. d. Show that the monopoly produces inefficiently. e. Show the price Pc and quantity Qc the firm would produce if it behaved as a competitive firm. 3. Label axes and all curves in the diagram below representing a monopoly. a. Show the quantity Qm and price Pm the monopoly will choose to maximize the monopoly profit. b. Show the quantity Qc and price Pc the monopoly would choose if it behaved as competitive firm.
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 3 images

Blurred answer
Knowledge Booster
Derivative of Real Variable
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education