6 Before deregulation, airlines relied on whereas airlines relied more on O antitrust laws; market power O antitrust laws; non-price competition non-price competition; price competition O price competition; non-price competition strategies to attract customers, after deregulation.
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- Price of laptops 1250 25 1000 50 750 75 500 100 250 125 Refer to the table shown, which shows the demand schedule for a firm that has a monopoly on the sale of laptops. If the marginal cost of producing laptops is $250 no matter how many laptops are produced and the monopolist seeks to maximize profit, it should set the price of laptops at: O 500 O Quantity Demanded per Year 1000 750 250Exercise 5. You are the manager for a monopoly with costs, demand, and marginal revenueas in the graph at the top on Figure 1.a. Does the fact that you operate in a monopoly always guarantee that you can achievehigher profits by increasing the price? Explain.b. Draw the area representing the profits on the top graph on Figure 1.c. Suppose one of your suppliers just announced an increase in prices for a specific partthat your product requires. What should the impact be to each of the curves on thetop graph of Figure 1? Explain carefully.d. Suppose economic conditions change in such a way that the demand curve for yourcompany shifts left.i. Draw a demand curve on the bottom graph on Figure 1 that leads to zero economicprofits.ii. Draw a demand curve on the bottom graph on Figure 1 such that any furtherleftward demand shift will cause you to shutdown.In this diagram, when this monopolist chooses the price and quantity which maximizes profit: 17.10- 12.00 8.40 6.00 0 $ 0 a OB and C are correct g d 2,720 e Marginal Revenue h O B. Deadweight-Loss is equal to "areas (c)+(f)." O A and C are correct Marginal Costs of Production O C. Producer's Surplus (i.e., "Monopoly Surplus") is equal to "areas (a)+(b)+(d)+(e)+(g)." ● A. Total Consumers' Surplus is equal to zero 4,640 5,920 Demand quantity 9,120
- Graph shows the cost and revenue information for Shitotsu the monopolist. What are the levels of price, output, total (sales) revenue. and total profits if the monopolist were to produce at the positions (a) through (d) indicated in table below? Costs and revenues 30 27 24 21 18 15 9 6 3 0 3 6 9 12 15 Quantity per period 18 21 MR D=AR MC ACWhy does a monopoly arise? O because of diseconomies of scale because entry to an industry is blocked because of elastic demand because firms want to maximize profitsMany schemes for price discrimination involvesome cost. For example, discount coupons take upthe time and resources of both the buyer and theseller. This question considers the implications ofcostly price discrimination. To keep things simple,let’s assume that our monopolist’s production costsare simply proportional to output so that averagetotal cost and marginal cost are constant and equalto each other.a. Draw the cost, demand, and marginal-revenuecurves for the monopolist. Show the pricethe monopolist would charge without pricediscrimination.b. In your diagram, mark the area equal to themonopolist’s profit and call it X. Mark thearea equal to consumer surplus and call it Y.Mark the area equal to the deadweight loss andcall it Z.c. Now suppose that the monopolist can perfectlyprice discriminate. What is the monopolist’sprofit? (Give your answer in terms of X, Y,and Z.)d. What is the change in the monopolist’s profit fromprice discrimination? What is the change in totalsurplus from…
- 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?Draw the demand curve, marginal revenue, and marginal cost curves from Figure 9.6, and identify the quantity of output the monopoly wishes to supply and the price it will charge. Suppose demand for the monopolys product increases dramatically. Draw the new demand me. What happens to the marginal revenue as a result of the increase in demand? What happens to the marginal cost curve? Identify the new profit-maximizing quantity and price. Does the answer make sense to you? Figure 9.6 Illustrating Profits at the HealthPill MonolpolyDeregulation, like all changes in government policy, always has pluses and minuses. What do you think some of the minuses might be for airline deregulation?
- How is the perceived demand curve for a monopolistically competitive film different from the perceived demand curve for a monopoly or a perfectly competitive film?Assume the figure below represents the market for Turkeys. What is the dead-weight loss if this market is operating as a monopoly? Price 50 40 30 20 10 O $1500 O $4000 100 $1000 MR MC ATC Demand 200 300 400 500 There will not be a dead-weight loss since they will be operating at the market equilibrium QuantityFigure Monpo12: A Firm in An Imperfectiy Competitive Industry Price MC Given: Q* = 120 P* ATC AVC P* = S5.00 PATC PATC = $3.40 PAvC PAVC = S0.50 D MR Quantity Refer to Figure Monpo12. Profits for this monopoly is about O $192 O No answcr text providcd. O No answer text provided. O $196