BUS Ch9 15. competition Vs. Monopoly Market Structure: Dead Weight Loss and the Misallocation of Resources. 48. If TC=1000 when Q=10, then if factors of production are doubled then TC = 2000 and Q=20. 47. Assume: a) Monopoly market structure. b) Firm's selection of "scale of plant results in "constant returns to scale" cost structure. c) This implies if you double inputs output doubles. d) Thus, double inputs doubles the cost of production. e) Thus, MC = AC. Q TC AC MC 10 1000 100 20 2000 100 100 40 4000 100 100 * YouTube 2:12/ 2:28 CC 67. In the video, when we assume constant returns to scale, the result is? Select one: O a. MC>AC O b. MC

BUS Ch9 15. competition Vs. Monopoly Market Structure: Dead Weight Loss and the Misallocation of Resources. 48. If TC=1000 when Q=10, then if factors of production are doubled then TC = 2000 and Q=20. 47. Assume: a) Monopoly market structure. b) Firm's selection of "scale of plant results in "constant returns to scale" cost structure. c) This implies if you double inputs output doubles. d) Thus, double inputs doubles the cost of production. e) Thus, MC = AC. Q TC AC MC 10 1000 100 20 2000 100 100 40 4000 100 100 * YouTube 2:12/ 2:28 CC 67. In the video, when we assume constant returns to scale, the result is? Select one: O a. MC>AC O b. MC

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 maintenance of a monopoly requires that a firm prevent the entry of potential competitors. Inaddition to acquiring a patent on a product, what strategies might a firm use to prevent entry? Explain and show graph.
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?
Firm X is going to apply a 2nd degree price discrimination. They plan to charge P1 for the first units and P2 for the subsequent units. The inverse market demand curve is P=100 - 0.4q, and the total cost function is TC = 10q + 130. Answer the following questions: 4. the quantities (q1 & q2) the firm is going to sell after applying 2nd price discrimination are: O q1=300 and q2 =150 O q1=75 and q2 =150 O q1=150 and q2 =300 O qt=150 and q2 =75 5. the prices (P1 & P2) the firm is going to charge after applying 2nd price discrimination are: O P1=70 and P2=40 O P1=40 and P2=70 O P1=20 and P2=40 O P1=60 and P2=30
Sid is the CEO of a local power plant operating in monopoly market structure. Explain why the demand curve (P) here is larger than the MR, and why Sid won’t produce on the inelastic portion of demand curve. Draw a graph comparing Sid’s market structure with a market in perfect competition (on the same graph). Be sure to label the components of deadweight loss. On a separate graph, show the case where the monopoly is making a positive profit and label the profit area.
Suppose the market for asparagus has the following (inverse) market demand schedule: p=88-0.2Q The industry has the following cost structure: MC = ATC = $4 The Amalgamated Asparagus Company is looking to spend factor resources in socially-wasteful legal battles and advertising campaigns to maintain a full monopoly in this market. Answer the following. a. For its monopoly, Amalgamated Asparagus is willing to pay resources worth up to $14070 Suppose that competitive rent-seeking pressures cause Amalgamated Asparagus to pay its maximum willingness-to-pay for monopoly rights. b. Social cost of this monopoly = $ 4410 Hint: Your answer to (a) should be whole number. Think about why.
Due to , a natural monopoly's average cost is as its output rises. a Economies of scale; increasing b Economies of scale; decreasing c Diseconomies of scale; increasing d Diseconomies of scale; decreasing
If a natural monopoly like SMUD, with declining long run ATC, was forced to break up into several small competitive firms, the Price charged by the competitive firms should decrease as the firms become more efficient. Total production for the industry should increase because of the efficiency generated by increased competition.
3. MUSEUM MONOPOLY MATH Once the museum has incurred the basic operating cost of 60 to open for the day, the average variable cost (and marginal cost) of serving each visitor is only 2. In other words, the museum's total daily operating cost function is DOC[Q] = 60 + 2Q, where Q is the number of visitors. Meanwhile, the inverse demand function for museum admission is P[Q] = 34 - Q. TIP: We used "average daily operating cost" instead of average total cost when discussing museums. a) If this museum were a commercial, profit-maximizing enterprise, then find its profit. TIP: You'll need to find Q* and P*. Even though you could answer this with a well-drawn graph, show that you can "do the math” to find the correct answer. TIP: This may sound familiar. What did you learn about drawing this graph? ☺ b) Suppose the museum manager set the price at 28, which is not the profit-maximizing price. Find its profit. For the remainder of the problem, suppose that the museum is instead a nonprofit…
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In the short run, each of the 5 firms in some industry faces a capacity constraint and constant marginal and average costs until this capacity is reached (see the table below). Marginal Cost = Average Cost Maximum output Firm 1 $50 100 Firm 2 $60 20 Firm 3 $67 50 Firm 4 $80 200 Firm 5 $92 70 Assuming that no firm has monopoly (pricing) power, what will be the quantity supplied at a price of (a) $40 (b) $55 (c) $73 (d) $99
1) With monopoly, we only specify long run cost functions because we are not as interested in the shut down decision and we don't have firm entry to compete away profit. Still, to make the math work, our monopolist cost functions often have fixed costs. Let's solve the following question: EagleSOFT has developed a computer program that will send UNT sports teams scores directly to purchaser's phones as text messages. Demand and total cost for the software company is described by the following equations: Demand: P = 70 -0.05Q, Cost: C = 4000 + - 10Q. a) What is the firm's level of output, the price they should charge, and their profit? b) What is the demand elasticity and Lerner index at the level of output?