6. Which of the following is a correct representation of a profit-maximizing monopoly earning positive economic profits? a. P = MRMC, and P > AVC. b. ATC=MR, and P > AVC. c. MC =MR, and P > ATC. d. P = MC, and P > ATC.
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- The following diagram illustrates the demand curve fac- ing a monopoly in an industry with no economies or diseconomies of scale and no fixed costs. In the short and long run, MC = ATC. Copy the diagram and indicate the following: 2MA 0 D MC = ATC Output, Q a. Optimal output b. Optimal price c. Total revenue d. Total cost e. Total monopoly profits f. Total "excess burden" or "welfare costs" of the monopoly (briefly explain)Which of the following statements about monopolies are correct? There is more than one correct answer to this question. You must mark all of the correct answers to receive full credit for this question. OAt the profit maximizing output for a monopoly, P< MR. OMonopolies are always illegal in the U.S. O If a firm enjoys decreasing returns to scale, this may help it to become a monopoly. In a pure monopoly, the firm is the industry. O A patent can help a firm to become a monopoly.5. Bruce runs the only bar in town. An individual consumer's demand for bar drinks is Q = 8 - P. The bar's marginal cost is $2 per drink. a) Compute the profit-maximizing monopoly quantity, price, and profit from serving this single consumer if Bruce's Bar charges a constant price per drink rather than using some nonlinear pricing scheme. What would the quantity and profit be if the bar serves 100 consumers identical to this one on a typical night? (Answer: Q 3 units) =
- Microsoft Windows 8 to Go on Sale in October. Microsoft announced that its Windows 8 operating system will be released in October 2012, three years after Windows 7 went public. Windows 8 will be available in 109 languages across 231 markets worldwide a. Is Microsoft a natural monopoly or a legal monopoly? b. Does Microsoft price discriminate or do the different prices of Windows reflect cost differences? c. Sketch a demand curve for Windows, Microsoft’s marginal cost curve, and the distribution of the total surplus between consumers and Microsoft.Assume the graph below shows the cost and revenue structure of a monopoly. Price and costs (dollars per unit) 10 8 2 0 2 4 MR MC ATC D 8 10 12 Quantity (units per year) 6 a) Find a profit-maximizing output level. Calculate the profit/loss at the profit-maximizing production level. b) Calculate market surplus when a monopoly operates at the profit-maximizing point and market surplus when a monopoly operates at the production level where it neither makes profit nor loss.Minnie's Mineral Springs is a single-price monopoly. Quantity (bottles Total cost (dollars per hour) Price The table shows the demand schedule for Minnie's Mineral Springs (columns 1 and 2) and the firm's total cost schedule (columns 2 and 3). (dollars per bottle) 15 per hour) 9. Suppose Minnie's is hit with a conservation tax of $7 an hour. 14 13 19 What is Minnie's new profit-maximizing output, price, and economic profit? 31 12 11 45 When Minnie's produces its new profit-maximizing output, the number of bottles it produces is 2 an hour. 10 61 Minnie's profit-maximizing price is Sa bottle. 012345
- HotAir Balloon Rides is a single-price monopoly. The table gives the demand schedule for balloon rides (columns 1 and 2) and HotAir's total cost schedule (columns 2 and 3). Now suppose that the government places a fixed tax of $40,000 a month on HotAir. What is HotAir's new profit-maximizing output, price, and economic profit? >>> Remember that the amounts in the table are given in thousands of dollars. When HotAir is producing its new profit-maximizing output, the number of rides it produces is a month. >>> Answer to 1 decimal place. Price (thousands of dollars per ride) 180 170 160 150 140 130 Quantity (rides per month) O 12345 0 Total cost (thousands of dollars per month) 25 150 285 430 585 750The graph below represents sales per week of ABC Inc. Ltd, a monopoly multinationalenterprise that supplies Hi-tech components. Use the graph to answer the questionsthat follow.i. State the elasticity of the monopoly firm demand curve. ii. Considering the figure, examine the benefits of the characteristics of themonopoly demand curve to ABC Inc. Ltd.iii. Suppose the demand and cost curves result in ABC Inc. Ltd earning aneconomic profit. Do you think ABC Inc. Ltd firm will earn profit in the long run? Explain your answer. Assume all factors constant.iv. Examine the effects of ABC Inc. Ltd on consumers.You are the manager for a monopoly with costs, demand, and marginal revenue as in the graph at the top on Figure 1.a. Does the fact that you operate in a monopoly always guarantee that you can achieve higher pro ts by increasing the price? Explain.b. Draw the area representing the pro ts on the top graph on Figure 1.c. Suppose one of your suppliers just announced an increase in prices for a specific part that your product requires. What should the impact be to each of the curves on the top graph of Figure 1? Explain carefully.d. Suppose economic conditions change in such a way that the demand curve for your company shifts left.i. Draw a demand curve on the bottom graph on Figure 1 that leads to zero economic profits.ii. Draw a demand curve on the bottom graph on Figure 1 such that any further leftward demand shift will cause you to shutdown.
- 26. The above figure shows the market for a particular good. If the market is controlled by a perfect-price-discriminating monopoly, compared to a monopoly who charges a single price, the change in producer surplus is A) B + D.B) A.C) A + C + E.D) B + C + D + E. 27. The above figure shows the market for a particular good. If the market is controlled by a perfect-price-discriminating monopoly, compared to a perfectly competitive market, the change in producer surplus is A) B + C.B) D + E.C) A + B + C.D) A + B + C + D + E.5. The demand equation of a monopoly firm is: P = 146 – 3Q²and the marginal cost is: MC = 4Q + 12, then find the total revenue and consumer's surplus.The graph below represents sales per week of ABC Inc. Ltd, a monopoly multinational enterprise that supplies Hi-tech components. Use the graph to answer the questions that follow. "image" i. State the elasticity of the monopoly firm demand curve. ii. Considering the figure, examine the benefits of the characteristics of themonopoly demand curve to ABC Inc. Ltd. iii. Suppose the demand and cost curves result in ABC Inc. Ltd earning aneconomic profit. Do you think ABC Inc. Ltd firm will earn profit in the longrun? Explain your answer. Assume all factors constant. iv. Examine the effects of ABC Inc. Ltd on consumers.
