$55 $50 $45 $40 $35 $30 $25 $20 Demand = P $15 $10 $5 MR $0 40 80 120 160 200 240 Output (Q) The diagram above shows the Demand and Marginal Revenue curves for a monopolist. Which of the following general relationships is NOT demonstrated in the diagram? Select one: O a. Price is greater than Marginal Revenue. b. Price equals Demand. c. The Marginal Revenue curve is steeper than the Demand curve. d Marginal Revenue equals Price at each Output. $

$55 $50 $45 $40 $35 $30 $25 $20 Demand = P $15 $10 $5 MR $0 40 80 120 160 200 240 Output (Q) The diagram above shows the Demand and Marginal Revenue curves for a monopolist. Which of the following general relationships is NOT demonstrated in the diagram? Select one: O a. Price is greater than Marginal Revenue. b. Price equals Demand. c. The Marginal Revenue curve is steeper than the Demand curve. d Marginal Revenue equals Price at each Output. $

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. Using the cost curves for the monopolist (right), answer the questions 3a - 3d below: a. Indicate where the monopolist maximizes profits, output is equal to b. The monopoly price that maximizes profits is c. What is the maximum profit the firm can earn from its product? d. When the monopolist is maximizing total profit, the average total cost of producing that output level is? Price (dollars) 10 6 4 0 MR 6 Quantity T 11 ||| 8 9 10 MC ATC D
Q26 and Q 27
1 . Profit maximization and loss minimization BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Suppose that BYOB cannot price discriminate; that is, it sells its beer at the same price per can to all customers. The following graph shows the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) for beer in this market. PLEASE HELP ME
(Table) Suppose a monopolist faces the demand relationship shown in the table. Marginal revenue for the second unit of output is: Quantity Demanded Price $10 $8 $7 $5 $3 $2 1 2. 3. 4 O A. $2. OB. $6 OC. $7. O D.$21.
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3. Natural monopoly analysis The following graph gives the demand (D) curve for water services in the fictional town of Streamship Springs. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local water company, a natural monopolist. On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist. PRICE (Dals per hundred cubicfe RREZRE MR 4 7 OP . QUANTITY Oundreds of cubic feet Monopoly Outcome
3. A monopolist can produce at constant average and marginal costs of AC = MC = 5. The firm faces a market demand curve given by Q = 55-P. (a) Calculate the profit-maximizing price-quantity combination for the monopolist. Also, calculate the monopolist's profits. Graph the relevant functions to illustrate these. (b) What output level would be produced by this industry under perfect competition (where price = marginal cost)? Indicate this on the graph. (c) Calculate the consumer surplus obtained by consumers in case (b). Show that this exceeds the sum of the monopolist's profits and the consumer surplus received in case (a). What is the value of the deadweight loss from monopolization? Indicate these on the graph.
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Questión 10 óf 18 Holiday Beach is a world-renowned beach operated by Holiday Town. The beach is remotely located and the only parking area for the beach is controlled by the town government. The graphs depict the marginal revenue (MR) and demand (D) for daily parking passes for tourists and residents. Tourists Residents Price per day Price per day $20 $207 18 18 16 14 14 12 12 D 10 - 10 8 8 6 6 MR 4 4 MR 2 1 2 3 4 6. 7 8 9. 10 1 2 3 4 7 8 9 10 Quantity of passes Quantity of passes Suppose Holiday Town issues registration plates to its residents to make it easy to determine which cars belong to residents and which cars belong to tourists. Assume the marginal cost of providing a daily parking pass is a constant $4 and Holiday Town wishes to price discriminate. What price will town residents be charged for a daily pass? $ %24
4. A monopolist is faced with the following cost and revenue curves: $ 80 70 60 50 40 30 20 10 0 -10 0 -20 100 200 300 400 FMC 500 AC AR 600 MR Quantity (a) What is the maximum-profit output?. (b) What is the maximum-profit price? (c) What is the total revenue at this price and output? (d) What is the total cost at this price and output? (e) What is the level of profit at this price and output? (f) If the monopolist were ordered to produce 300 units, what would be the market price? (g) How much profit would now be made? (h) If the monopolist were faced with the same demand, but average costs were constant $60 per unit, what output would maximise profit? (i) What would be the price now? (j) How much profit would now be made? (k) Assume now that the monopolist decides not to maximise profits, but instead sets a price of $40. How much will now be sold?.
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