Commun X SCC PortalGuard - SCC Portal Lo X Assignments: Microeconomics Chapter 10 HW connect.mheducation.com/flow/connect.html O HW 1 Saved Help Refer to the "In the News" below: In the News: U.S. Sues over Drug's Price Hike Ovation Pharmaceuticals violated federal law in 2006 when it bought a competitor's drug, creating a monopoly for the heart treatment used on premature babies, and then raised the price, a federal lawsuit says. The Federal Trade Commission wants Ovation to return "millions of dollars" in overcharges for the drug, used to treat a condition that afflicts 30,000 babies each year, Bureau of Competition acting Director David Wales said. The lawsuit says the price rose from $36 a vial to nearly $500. The company said the FTC's allegations are "without merit." -Julie Appleby Source: USA Today, December 17, 2008, p. 3A. Reprinted with permission. Instructions: Enter your response as a whole number. By approximately how much did the price of the heart drug for babies increase when a monopoly was established? %24 < Prev 8 of 9 Next > T12a

Commun X SCC PortalGuard - SCC Portal Lo X Assignments: Microeconomics Chapter 10 HW connect.mheducation.com/flow/connect.html O HW 1 Saved Help Refer to the "In the News" below: In the News: U.S. Sues over Drug's Price Hike Ovation Pharmaceuticals violated federal law in 2006 when it bought a competitor's drug, creating a monopoly for the heart treatment used on premature babies, and then raised the price, a federal lawsuit says. The Federal Trade Commission wants Ovation to return "millions of dollars" in overcharges for the drug, used to treat a condition that afflicts 30,000 babies each year, Bureau of Competition acting Director David Wales said. The lawsuit says the price rose from $36 a vial to nearly $500. The company said the FTC's allegations are "without merit." -Julie Appleby Source: USA Today, December 17, 2008, p. 3A. Reprinted with permission. Instructions: Enter your response as a whole number. By approximately how much did the price of the heart drug for babies increase when a monopoly was established? %24 < Prev 8 of 9 Next > T12a

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Is Monopoly Efficient?
George has a monopoly on burrito sales in a small town in Kansas. The burritos cost him a constant $5 each to produce. He faces following demand schedule for his product: Price Quantity Demanded $30 0 $25 1 $20 2 $15 3 $10 4 $5 5 $0 6 Under normal monopoly conditions, how many burritos should he produce, what price should he charge, and how much profit can he expect to make? Draw a graph under these assumptions showing (and calculating) producer surplus, consumer surplus, economic surplus, and deadweight loss. If George could engage in perfect price discrimination, how many burritos would he produce, what would his total revenue be, and how much profit would he earn? Draw a graph under these assumptions showing (and calculating) producer surplus, consumer surplus, economic surplus, and deadweight loss. Is society better off by allowing George to perfectly price discriminate? Defend your answer.
Since the monopolist is a “price maker” and sets the price of his output, he will always charge the highest price. True or False? Why?
Discuss the basic differences between a competitive and a monopoly market. Which market has higher elastic demand in the long run and why?
Barbara is a producer in a monopoly industry. Her demand curve and total cost curve are given by Q = 160 - 4P and TC = 4Q. Barbara will produce ✓ units. Barbara will charge a price of Barbara will make a profit of Suppose now the government imposes a tax of 4 dollars on each unit sold. With the tax: Barbara will produce ✓ units. Barbara will receive a price per unit of higher). Barbara will make a profit of In addition to the tax, suppose the government imposes a business levy (a fixed cost) of $500. With this levy: Barbara will produce Barbara will charge a price of Barbara will make a profit of ✓. Note: we're looking for the Barbara receives, not the price consumers pay (which will be ✓ units. ✓. Note: we're looking for the Barbara receives, not the price consumers pay (which will be higher).
Why might monopoly arise?
Which of the following is most likely to be a monopoly? options: local utility company local gym local grocery store local coffee shop
Suppose a monopolist faces a market demand that is the first two columns in the table below. Also, in the short run, assume that Total Fixed Cost equals $100 and the monopolist has Total Variable Cost according to the table. Find Total Revenue for each price and quantity combination, and then Marginal Revenue as price falls and quantity increases. Fill in the rest of the costs in the table and find profit at each price and quantity combination as the difference between Total Revenue and Total Cost.
If a monopoly firm can sell 12 items per day at a price of $150 each, and to increase sales by one (marginal) item per day, the monopolist must lower price to $148, calculate the marginal revenue of the 13th item:
What is the time when the price discrimination is profitable?
Consider the local telephone company, a natural monopoly. The following graph shows the demand curve for phone services, the company's marginal revenue curve (labeled MR), its marginal cost curve (labeled MC), and its average total cost curve (labeled AC). (Hint: Click a point on the graph to see its exact coordinates.) PRICE (Dollars per month) 160 140 120 100 80 60 40 20 0 0 1 MR 2 3 4 567 QUANTITY (Thousands of households per month) AC MC D 8 (?)
Give typing answer with explanation and conclusion A monopolist has a demand curve given by P = 88 − Q and a total cost curve given by TC = 34 + Q2. The associated marginal cost curve is MC = 2Q. Suppose the monopolist also has access to a foreign market in which he can sell whatever quantity he chooses at a constant price of 60. How much will he sell in the foreign market? What will his new quantity and price be in the original market?