89 c.6 d. 2 Quantity (number of subscriptions) (Ref 28-1 Figure: PPV) Use Figure 28-1: PPV. The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $20. If the cable company is a monopoly, how much will it produce? a.8 b.4

89 c.6 d. 2 Quantity (number of subscriptions) (Ref 28-1 Figure: PPV) Use Figure 28-1: PPV. The figure shows the demand and marginal revenue for a pay-per-view football game on cable TV. Assume that the marginal cost and average cost are a constant $20. If the cable company is a monopoly, how much will it produce? a.8 b.4

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. Some people say that if there is a monopoly producer they can charge any price they want and the buyers have no choice but to buy the product at that price. Explain if that is true by considering a monopoly airline. 2. When you go to your dentist, she charges you the full price for your clean and shine but the dentist charges your grandmother (a senior citizen) a 20 percent discounted price for the same service. Explain why the dentist is able to make the price discrimination work. 3. Even though everyone values clean air and wishes to breathe clean air, environmentalists and a large number of city dwellers would say that Canadian cities have excessive air pollution. Explain why, if left to the free-market system, the problem of excessive air pollution would not be solved? Name another problem that would not be solved, if left to the free-market system. Suppose someone makes the following statement in support of introducing barriers to trade for importing men’s clothing…
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8. Can a monopolist that is not subject to any regulation lead the market to Pareto efficiency by his own initiative? Pareto efficiency is a situation that cannot be modified so as to make any one individual better off without making at least one individual worse off. In the model of monopoly, we assume that the ultimate goal of a monopolist is to maximize his profit, which means MC-MR. We have seen (for example, in the lecture or earlier problems, e.g., problem 5) that this equality leads the monopolist to produce less and charge a higher price than in perfect competition. This makes the monopolist better off but at the same time makes consumers worse off, as compared to perfect competition. This also leads to a deadweight loss. As we have the deadweight loss, the monopoly is definitely not Pareto efficient. See the lecture slide # 37. The transactions between Qm and Qk (quantities supplied in the monopoly and perfect competition, respectively) could take place to everyone's benefit,…
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DeBeers has a monopoly on the production of diamonds. Use the following graph showing the demand, MR and cost curves of DeBeers to answer the questions below. How many carats of diamonds does DeBeers produce to maximize its annual profit? What price does it charge? How much annual profit does it make? If DeBeers was producing at the allocatively efficient level of output, how many carats of diamonds would it produce? What price would it charge? Suppose that the government decided to regulate DeBeers monopoly and imposes a price ceiling of $50 per carat of diamonds. How many carats of diamonds would DeBeers produce? What price would it charge? What profit would it make?
Review the graph at right for a monopoly market (enter all of your responses as whole numbers). Price 100- How much is the consumer surplus? S 90- MC How much is the producer surplus? s 80- 70- How much is the deadweight loss? S 60 80- Monopoly total surplus is $ 50- Monopoly total surplus is V competitive total surplus. 40- 30- 20- 10- MR D 10 30 40 50 60 70 90 100 Quantity
The following table refers to information about a monopolist. The demand and total cost schedules for the monopolist are presented. Quantity 1 2 34 5 6 7 ܒܢ Calculate the marginal revenue from selling the 4th unit of output. Express your answer without units (e.g., if your answer is "$400", write "400" in the answer box). Type your answer... W 3 LU E a $ 4 R ddelddeelala www 000 6 Sº % Price $30 $28 $26 $24 $22 $20 $18 5 T 6 MacBook Pro Y & 7 A U * 00 8 1 Total cost $10 $20 $30 $40 $50 $60 $70 W 9 P O O T a
6. The following graph shows the demand, marginal revenue, and marginal cost curves for a single-price monopolist that produces a drug that helps relieve arthritis pain.
Question 2 – Monopoly Draw the diagram for a monopoly that is making profits. In your diagram from part 1 indicate the area that represents the deadweight loss.