A pharmaceutical firm Astra is the sole producer and seller of a special drug under patent protection and behaves like a monopoly. When the patent expires, and the market for the drug becomes competitive with the entry of other firms that produce the same drug, then O the price of the drug will go up and the quantity sold will fall. the price of the drug will fall, the quantity sold will increase but the total surplus (consumer surplus plus producer surplus) will decrease the price of the drug will fall, the quantity sold will increase and the total surplus (consumer surplus plus producer surplus) will also increase. O the price will fall but the quantity sold will also decrease.

A pharmaceutical firm Astra is the sole producer and seller of a special drug under patent protection and behaves like a monopoly. When the patent expires, and the market for the drug becomes competitive with the entry of other firms that produce the same drug, then O the price of the drug will go up and the quantity sold will fall. the price of the drug will fall, the quantity sold will increase but the total surplus (consumer surplus plus producer surplus) will decrease the price of the drug will fall, the quantity sold will increase and the total surplus (consumer surplus plus producer surplus) will also increase. O the price will fall but the quantity sold will also decrease.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter11: Price And Output Determination: Monopoly And Dominant Firms

Section: Chapter Questions

Problem 4E

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hey how are you a)Draw the cost curves for a typical firm. Explain how a competitive firm chooses the level of output that maximizes profit. At that level of output, show on your graph the firm’s total revenue and total cost. b)Draw the demand curve, marginal revenue curve, average total cost curve, and marginal-cost curve for a monopolist. Show the profit-maximizing level of output, the profit-maximizing price, and the amount of profit. c)Why the demand curve for a firm operating in monopolistic competition is more elastic compared to the firm operating as a monopoly.
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A perfectly competitive firm is onsidered to be more generous in terms of price and quantity of output in comparison to firm belonged to monopoly and monopolistic markets. C. If firms incurring loss in this market begin to exit the market, what will happen to the market equilibrium? Demonstrate your answer using a simplified graph. d. The firm wishes to supply output more than the quantity determined under the equilibrium condition, is it worth to pursue?
Is this a natural monopoly?
Suppose a monopoly is producing at its profit-maximising (loss-minimizing) quantity, and the price corresponding to this quantity is below average total cost but above average variable cost. The monopoly will shut down in the short run but return to production in the long run shut down in the short run and exit the market in the long run keep producing both in the short run and in the long run keep producing in the short run but exit the market in the long run None of the above.
Comparing a perfectly competitive market to a monopoly, which of the following is true? Group of answer choices Price will be higher than marginal cost in the perfectly competitive market but will beequal to marginal cost in the monopoly. Price will be equal to marginal revenue in the perfectly competitive market but will behigher than marginal revenue in the monopoly. at that point on the market demand curve which intersects the marginal cost curve. Price will be higher and quantity will be lower in the perfectly competitive market than inthe monopoly.
A drug company introduces a drug which is protected by a patent. Therefore,it is a monopoly in that specific market. Suppose that inverse demand for the drug isgiven by P(y) = 100 − y/2. And cost function is C(y) = y2 + 10y + 100.a. What is the profit maximizing output and price?b. Calculate the profit, consumer’s surplus, producer’s surplus and thedeadweight loss.Suppose that the patent expires and the market becomes perfectly competitive.c. Find the profit maximizing output and price. And compare your answer with(a).d. Calculate the profit, consumer’s surplus, producer’s surplus and thedeadweight loss. And compare your answer with (b).
Raphael’s hair salon is a monopoly in a small town and is currently earning an economic profit. Draw a correctly labeled graph for Raphael and include the curves that are necessary to identify the following. The profit-maximizing price and quantity of haircuts, labeled Pm and Qm The area representing economic profits, shaded completely Does Raphael’s hair salon produce the allocatively efficient quantity? Explain. Assume that Raphael signs a new lease with an increase in rent, a fixed cost. Will the price of haircuts provided by Raphael increase, decrease, or stay the same in the short run? Explain. Assume that new hair salons enter the market and that the market becomes monopolistically competitive. Answer each of the following. The entry of new hair salons creates close substitutes for each individual salon’s services. As a result, will the demand for Raphael’s hair salon become more elastic or become less elastic, or will there be no change in the elasticity? Will…
Give typing answer with explanation and conclusion The inefficiency (dead-weight loss) of a monopoly (as compared to perfect competition) indicates the amount by which Group of answer choices price exceeds marginal revenue at a particular output level. consumer welfare is increased by the monopolist. price exceeds marginal cost at a particular output level. marginal benefits exceed marginal cost for those units not produced by the monopolist but that would otherwise be produced in a competitive market. marginal costs exceed marginal benefits for those units not produced by the monopolist but that would otherwise be produced in a competitive market.
Assume someone organizes all farms in the nation into a single-price monopoly. As a result, the amount of food produced increases remains constant decreases
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