The image presents an exercise on regulating a monopoly firm that sells 50-pound bags of concrete. Here is a transcription suitable for an educational website:---Suppose you have been tasked with regulating a single monopoly firm that sells 50-pound bags of concrete. The firm has fixed costs of $30 million per year and a variable cost of $6 per bag no matter how many bags are produced.**Instructions:** Enter your answers as a whole number. In part e, round your answer to two decimal places.a. If this firm keeps increasing its output level, will ATC per bag ever increase?- [Dropdown] (Click to select)Is this a decreasing-cost industry?- [Dropdown] (Click to select)b. If you wished to regulate this monopoly by charging the socially optimal price, what price would you charge?- $ [Input] per bagAt that price, the size of the firm's [Dropdown] (Click to select) would be $ [Input] million.Will the firm want to exit the industry?- [Dropdown] (Click to select)c. You find out that if you set the price at $7 per bag, consumers will demand 30 million bags.At that price, the firm's profit or loss will be $ [Input] million.d. If consumers instead demanded 40 million bags at a price of $7, how big would the firm's profit or loss be?At that price, the size of the firm's [Dropdown] (Click to select) would be $ [Input] million.e. Suppose that demand is perfectly inelastic at 40 million bags, so that consumers demand 40 million bags no matter what the price is. What price should you charge if you want the firm to earn only a fair rate of return? Assume as always that TC includes a normal profit.- $ [Input]---### Explanation (if applicable):There were no graphs or diagrams present in the image to describe. The task involves calculations related to average total cost (ATC), profit, and monopolistic regulation strategies.

a. If this firm keeps increasing its output level, will ATC per bag ever increase? |(Click to select) ♥ Is this a decreasing-cost industry? (Click to select) ♥ b. If you wished to regulate this monopoly by charging the socially optimal price, what price would you charge? 2$ per bag At that price, the size of the firm's (Click to select) ♥ would be $ |million. Will the firm want to exit the industry? (Click to select) ♥ c. You find out that if you set the price at $7 per bag, consumers will demand 30 million bags. At that price, the firm's profit or loss will be $ million.

a. If this firm keeps increasing its output level, will ATC per bag ever increase? |(Click to select) ♥ Is this a decreasing-cost industry? (Click to select) ♥ b. If you wished to regulate this monopoly by charging the socially optimal price, what price would you charge? 2$ per bag At that price, the size of the firm's (Click to select) ♥ would be $ |million. Will the firm want to exit the industry? (Click to select) ♥ c. You find out that if you set the price at $7 per bag, consumers will demand 30 million bags. At that price, the firm's profit or loss will be $ million.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

4 Suppose that an industry is characterized as follows: C = 50 + 2Q^2; MC = 4Q; P = 80 -2Q. If there is only one firm in the industry, find the monopoly price, quantity, and level of profit. How would the outcomes change if the market is transformed to perfectly competitive?
PRICE (Dollars per subscription) 100 90 80 70 60 50 40 30 20 10 0 0 2 4 Pricing Mechanism Profit Maximization " 6 10 12 14 QUANTITY (Thousands of subscriptions) Marginal-Cost Pricing Average-Cost Pricing T 8 Complete the first row of the following table. MR O True O False Suppose the government has elected not to impose regulations on the industry, and so the firm faces no regulatory constraints in maximizing profits. 16 Complete the second row of the previous table. ATC MC Complete the third row of the previous table. D 18 20 Short Run Price Quantity (Subscriptions) (Dollars per subscription) Suppose now that the government decides to require the monopolist to set its price equal to marginal cost. Profit Suppose now that the government decides to require the monopolist to set its price equal to average total cost. Long-Run Decision True or False: Over time, the internet service provider has a very strong incentive to lower costs when subject to average-cost pricing regulations.
Please see the images of the article below and help answer questions. 1. Evaluate this statement: "Whereas a competitive firm must sell at the market price, a monopoly owns its market, so it can set its own prices. Since it has no competition, it produces at the quantity and price combination that maximizes its profits." Must a perfectly competitive firm sell at a market-clearing price? Alternatively, is the market-clearing price the profit-maximizing price that a competitive firm chooses to set? Can a monopolist set any (price, quantity) combination? 2. Evaluate this statement: "Monopolies drive progress because the promise of years or even decades of monopoly profits provides a powerful incentive to innovate. Then monopolies can keep innovating because profits enable them to make the long-term plans and finance the ambitious research projects that firms locked in competition can't dream of." Cite a counter-example to this claim in which deregulation of a monopolist led to lower…
Answer Q 4
(Figure: Electricity generation). If this monopoly were regulated under Average Cost (AC) pricing, the output produced is Group of answer choices 2,700 GWh 3,000 GWh 0 GWh 2,000 GWh
3. When is it optimal for a monopolist to produce the same output as in a perfectly competitive market?
d) If a price ceiling of $17.50 is imposed by the government on the monopolist, estimate (based on the graph) the quantity that the monopolist will produce. In this case, does the price ceiling in a monopoly improve economic efficiency or not? e) Supposed that instead of a regular monopoly, the graph above pertains to a natural monopoly, what change must be made to the graph to depict a natural monopoly?
7. Suppose that the inverse market demand for pumpkins is given by P = $10-0.050. Pumpkins can be grown by any- one at a constant marginal cost of $1. ena. If there are lots of pumpkin growers in town so that the pumpkin industry is competitive, how many pumpkins will be sold, and what price will they sell for? b. Suppose that a freak weather event wipes out the pumpkins of all but two producers, Linus and Lucy. Mesob 0 17050
3. Suppose the minimum efficient scale of an industry is at 100 units of output. At this point, average cost equals 50. Inverse demand for this industry is: P(Q) = A - Q a) What range of values should A take on in order for this industry to exhibit the structure of a natural monopoly? b) At what value of A the industry in part (b) stops being a natural monopoly?
While firms in perfect competition maximize profit by producing at a quantity where the marginal cost of producing another unit of a good is equal the the marginal revenue from producing another unit, monopoly firms will maximize profit by producing at a quantity where marginal cost of producing another unit is equal to the marginal revenue (the same as perfect competition) the marginal profit the average total cost O the price of the good 10:04 P Bi 63°F Cloudy 5/20/202 e here to search O
5. Suppose a company has a monopoly on a game called Monopoly and faces a demand curve given by QT = 100-P and a marginal revenue function given by MR = 100 - 2QT where QT equals the combined total number of games produced per hour in the company's two factories (QT = 91 + 92). If factory 1 has a marginal cost function given by MC₁ = q1-5 and factory 2 has a marginal cost function given by MC2 = 0.5q25, how much total output will the company choose to produce and how will it distribute this production between its two factories in order to maximize profits?
1. Asssume the following equations describe the conditions for an unregulated monopoly: Qd = q = 25,000 -100P or P = 250-0.01q TC = 480,000 + 70q + 0.005q2 where Qd is the quantity demanded for the firm, P is the commodity's price in dollars, TC is total cost in dollars, and q is the quantity of output produced. Based upon the above equations, answer the following questions: a. What is the firm's profit maximizing quantity of output? b. What price will the firm charge for the commodity c. What does the firm's total economic profit equal? d. What is the amount of deadweight loss that exists given the monopoly is unregulated? Assume the government is now going to regulate this monopoly, and the regulators want to guarentee the monopolist produces the socially optimal quantity of output. e. What is the socially optimal quantity of output? f. What price would regulators establish to guarantee the monopolist produces the socially optimal quantity of output? g. What does the firm's…