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ATC $ MC MC ATC D MR MR Quantity (a) Quantity (Б) ATC MC D MR Quantity (c) Which of the graphs above would reflect a Monopolist in the long run? a only

ATC $ MC MC ATC D MR MR Quantity (a) Quantity (Б) ATC MC D MR Quantity (c) Which of the graphs above would reflect a Monopolist in the long run? a only

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The image presents three graphs labeled (a), (b), and (c). Each graph depicts a situation in which a monopolist operates. The graphs include key economic curves such as Marginal Cost (MC), Average Total Cost (ATC), Demand (D), and Marginal Revenue (MR) plotted against Quantity (Q). **Graph (a):** - The MC curve intersects the ATC curve at its minimum point. - MC is upward sloping. - The demand curve (D) is downward sloping. - MR is downward sloping and lies below the demand curve. **Graph (b):** - Similar to graph (a), the MC curve intersects the ATC curve at its minimum point. - MC is upward sloping. - The demand curve (D) remains downward sloping. - MR is downward sloping and below the demand curve. **Graph (c):** - The MC curve intersects the ATC curve. - MC is upward sloping and crosses ATC at a higher level than in graphs (a) and (b). - The demand curve (D) is downward sloping. - MR is downward sloping, positioned below the demand curve. **Question:** The accompanying question asks which of the graphs accurately represents a monopolist in the long run. - a only - b only - a or b - c only Each graph is a typical representation of how a monopolist might set quantity and price based on their cost structures and the market demand. The task involves selecting the correct graph(s) that indicate a long-run equilibrium for a monopolist, typically one where the average total cost curve is tangent to the demand curve, allowing a monopolist to earn zero economic profit (normal profit).
Transcribed Image Text:The image presents three graphs labeled (a), (b), and (c). Each graph depicts a situation in which a monopolist operates. The graphs include key economic curves such as Marginal Cost (MC), Average Total Cost (ATC), Demand (D), and Marginal Revenue (MR) plotted against Quantity (Q). **Graph (a):** - The MC curve intersects the ATC curve at its minimum point. - MC is upward sloping. - The demand curve (D) is downward sloping. - MR is downward sloping and lies below the demand curve. **Graph (b):** - Similar to graph (a), the MC curve intersects the ATC curve at its minimum point. - MC is upward sloping. - The demand curve (D) remains downward sloping. - MR is downward sloping and below the demand curve. **Graph (c):** - The MC curve intersects the ATC curve. - MC is upward sloping and crosses ATC at a higher level than in graphs (a) and (b). - The demand curve (D) is downward sloping. - MR is downward sloping, positioned below the demand curve. **Question:** The accompanying question asks which of the graphs accurately represents a monopolist in the long run. - a only - b only - a or b - c only Each graph is a typical representation of how a monopolist might set quantity and price based on their cost structures and the market demand. The task involves selecting the correct graph(s) that indicate a long-run equilibrium for a monopolist, typically one where the average total cost curve is tangent to the demand curve, allowing a monopolist to earn zero economic profit (normal profit).
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