4) $ MC J Н KH ATC G MR 0 T V X Y Quantity D Refer to the graph for a profit-maximizing monopolist. The firm will produce the quantity A) OY. B) OX. C) OV D) OT
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- How can a monopolist identify the profit-maximizing level of output if it knows its total revenue and total cost curves?Imagine that you ale managing a small firm and thinking about entering the market of a monopolist. The monopolist is currently charging a high price, and you have calculated that you can make a nice profit charging 10 less than the monopolist. Before you go ahead and challenge the monopolist, what possibility should you consider for how the monopolist might react?Draw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the monopolists profit-maximizing output level. Now, think about a slightly higher level of output (sayQ0+1). According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?
- Imagine a monopolist could charge a different price to every customer based on how much he or she were willing to pay. How would this affect monopoly profits?Is a monopolistically competitive firm productively efficient? Is it allocatively efficient? Why or why not?How does the quantity produced and price charged by a monopolist compare to that of a perfectly competitive film?
- Why are urban areas willing to subsidize urban transit systems? Does the argument for subsidies make sense to you?What is the usual shape of a marginal revenue cuwe for a monopolist? Why?Some years ago. two intercity bus companies, Greyhound Lines, Inc. and Trailways Transportation System, wanted to merge. One possible definition of the market for this case was the market for intercity bus service. Another possible definition was the market for intercity transportation, including personal cars, car rentals, passenger trains, and commuter air flights.' Which definition do you think the bus companies preferred, and why?