c. In the coordinate axis below, combine the elements you circled in part (b) and use them to identify the optimal monopoly output, monopoly price and monopoly profits. Compare these predictions to the price and profit conditions for the firm as a competitor that you developed in part a. P

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Chapter1: Making Economics Decisions
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c. In the coordinate axis below, combine the elements you circled in part (b)
and use them to identify the optimal monopoly output, monopoly price and
monopoly profits. Compare these predictions to the price and profit
conditions for the firm as a competitor that you developed in part a.
P
Firm
Q
Transcribed Image Text:c. In the coordinate axis below, combine the elements you circled in part (b) and use them to identify the optimal monopoly output, monopoly price and monopoly profits. Compare these predictions to the price and profit conditions for the firm as a competitor that you developed in part a. P Firm Q
1. Monopoly Pricing. A Graphical Analysis. The two panel graph below illustrates
the market for canned peaches (in the left panel) and cost conditions for a
representative firm. Assume that the peach industry is competitive.
P
P.
a. In the rightmost panel illustrate the optimal output, price and profit levels
for the competitive firm.
S
Market
D
Optimal price
плинт
MC ATC
Optimal outpout
Firm Q*
b. Suppose that due to concerns regarding the paucity of domestic peach
producers the government gives to USA Peaches Inc. an exclusive right to
domestically produce and sell canned peaches. In your above graphs
circle the components in the competitive market and firm charts that you
would use to generate predictions for the monopolist.
Transcribed Image Text:1. Monopoly Pricing. A Graphical Analysis. The two panel graph below illustrates the market for canned peaches (in the left panel) and cost conditions for a representative firm. Assume that the peach industry is competitive. P P. a. In the rightmost panel illustrate the optimal output, price and profit levels for the competitive firm. S Market D Optimal price плинт MC ATC Optimal outpout Firm Q* b. Suppose that due to concerns regarding the paucity of domestic peach producers the government gives to USA Peaches Inc. an exclusive right to domestically produce and sell canned peaches. In your above graphs circle the components in the competitive market and firm charts that you would use to generate predictions for the monopolist.
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