Classify each of the items based on if it is true of network goods or not. True of network goods Network goods are always high tech Answer Bank Competition is for the entire market instead of within a market. The good with the highest quality always captures the majority of the market. The anti-trust implications of the network good model are the same as for natural monopolies The utility of one consumer depends on choices of other consumers. Not true of network goo Firms that dominate the market for a network good often make it easy for consumers to switch between standards. A single standard is often more profitable for all firms than ducting standards. Goods are usually priced above marginal cost

Classify each of the items based on if it is true of network goods or not. True of network goods Network goods are always high tech Answer Bank Competition is for the entire market instead of within a market. The good with the highest quality always captures the majority of the market. The anti-trust implications of the network good model are the same as for natural monopolies The utility of one consumer depends on choices of other consumers. Not true of network goo Firms that dominate the market for a network good often make it easy for consumers to switch between standards. A single standard is often more profitable for all firms than ducting standards. Goods are usually priced above marginal cost

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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d. Suppose the government imposes an average pricing rule, requiring the monopolist to set its price equal to the average total cost. Place the point labeled “Average cost pricing” at the appropriate coordinates to indicate the firm's price and quantity under this rule. Please place the Monoploy Pricing, Marginal Cost Pricing, and Average Cost Pricing on their appropriate places on the graph. Thank you!
Exercise 3.8. Dayna's Doorstops, Inc. (DD) is a monopolist in the doorstop industry. Its cost is C = 100 - 5Q + Q², and demand is P = 55 - 2Q. a) What price should DD set to maximize profit? What output does the firm produce? How much profit and consumer surplus does DD generate? b) What would output be if DD acted like a perfect competitor and set MC = P? What profit and consumer surplus would then be generated? c) What is the deadweight loss from monopoly power in part (a)? d) Suppose the government, concerned about the high price of doorstops, sets a maximum price at $27. How does this affect price, quantity, consumer surplus, and DD's profit? What is the resulting deadweight loss? e) Now suppose the government sets the maximum price at $23. How does this decision affect price, quantity, consumer surplus, DD's profit, and deadweight loss? f) Finally, consider a maximum price of $12. What will this do to quantity, consumer surplus, profit, and deadweight loss?
Billy Bob's is catering to Baruch College and there are two types of customers: faculty and students. There are 40 faculty members willing to pay $30 per meal while there are 660 students willing to pay $5 per meal. There are 700 meals available at the catering event. Suppose the total cost of catering the event, including the meals, is $2,000. How much profit will Billy Bob's earn if they can perfectly price discriminate? $1,300 $3,500 $4,500 $2,500
Answer choices are first blank: negative, positive, zero second blank: an equal number of, fewer, more
A monopoly, unlike a perfectly competitive firm, has some market power. Thus, it can raise its price, within limits, without quantity demanded falling to zero. The main way monopolies retain their market power is through barriers to entry, which prevent other companies from entering monopolized markets and competing for customers. Consider the market for taxi services. In order to own and operate a taxi, drivers are required to obtain a taxi medallion. Which of the following best explains the barriers to entry that exist in this scenario? Increasing returns to scale Control over an important input O Legal barriers
A monopolistic firm operates in two separate markets, Market A and Market B. The firm can sell its product at different prices in each market due to different demand conditions. In Market A, the firm faces a demand curve given by Q_A = 100 - P_A, where Q_A is the quantity demanded in Market A and P_A is the price charged in Market A. In Market B, the demand curve is Q_B = 80 - 2P_B, where Q_B is the quantity demanded in Market B and P_B is the price charged in Market B. The firm has a total production capacity of 120 units. What price should the firm charge in each market to maximize its total revenue?
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There are two firms. Firm 1 (or, a small firm) produces a single product, product A, at zero cost. Firm 2 (or, a big firm) is a multi-product firm that sells both products A and B. Firm 2 is less efficient in producing A. It incurs a constant marginal cost c > 0 for producing A. However, firm 2 is a monopolist of the market of product B and its cost of producing productB is zero. A unit mass (i.e. a total measure of 1) of consumers all have the same preference which is known to producers, and view the two products as independent. To consumers, the value of product A is vA > c while the value of product B is vB > 0. If a consumer buys both products, the gross payoff is vA + vB . (Note that, unlike in the lecture slides where consumers are heterogenous and their values are distributed in [0, 1], here the setting is simpler and all consumers are homogenous and have the same vA and vB) Firms compete in prices and set their prices simultaneously and independently. We assume…
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Which of the following market types are allocatively efficient? Question Monopoly Oligopoly Monopolistic competition None of the above
In a market where firms are monopolistically competitive: Group of answer choices There is one firm that produces a standardized product. There are few firms, each producing a very differentiated product. There are market participants who are all price takers. There are many firms producing a differentiated product.
Economics A market comprises two consumers groups: high- demand types and low-demand types. Assume there are 100 consumers of each type. The high types have demand QH = 14 – Pand low types have demand QL = 12 – P. Assume the marginal (and average) cost is 4 and there are no fixed costs. If the monopolist firm is able to distinguish between the two consumer types and using block pricing to extract maximum profit, how much profit will they earn in total? Select one: а. 9000 b. 6800 С. 8200 d. 7200