For the following statement given below, indicate whether you tend to agree, disagree, or are uncertain about the truth of the statement, and explain your reasoning. Graphical analysis is encouraged. “Monopolies should be regulated by antitrust laws and/or government price regulations because left unregulated they do not produce a socially efficient level of output and overcharge for their products."

For the following statement given below, indicate whether you tend to agree, disagree, or are uncertain about the truth of the statement, and explain your reasoning. Graphical analysis is encouraged. “Monopolies should be regulated by antitrust laws and/or government price regulations because left unregulated they do not produce a socially efficient level of output and overcharge for their products."

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. 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.
QUESTION 2 Let a monopolist has 8 stores in a city. Using Hotelling linear city model, calculate the Total Social Surplus (TSS) and profit of the monopolist. Can we say that TSS is at its maximum when the number of firms is four? Can we say that profit is maximised when the number of firms is seven? Justify your answers clearly. (Note: Use ALL of the assumptions below and also following values for the parameters: R = $10; c = $2; N = 1000; t = $2; and F = $40 in your analysis). Assumptions : prices and quantities for the two stores given any fixed locations for the two. how the two stores would compete in terms of locations if they could move back and forth along the length of land l at zero costs. the socially efficient location of stores for any number of stores. Main Street is of length l = 1 mile; so the street begins at l = 0 and ends at l = 1. There are N identical consumers each with the same utility function equally spaced along Main Street; that is, there is a uniform…
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?
Suppose a local utility company provides electricity to a small town. The figure to the right illustrates the utility company's marginal cost of providing electricity along with the town's demand for electricity. Part 2 Assume the local utility company is a monopoly. Use the triangle drawing tool to shade in the dead weight loss created by the monopoly (compared to if the market were perfectly competitive). Properly label this shaded area. Part 3 Carefully follow the instructions above, and only draw the required objects. ... Question content area right Part 1 010203040506070809010000.020.040.060.080.10.120.140.160.180.20.220.24Quantity of electricity (kilowatt hours in millions)Price and cost (dollars per kilowatt hour) MCMC Upper DD MR
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Describe the difference in economic profit between a competitive firm and a monopolist in both the short and long run. Which should take longer to reach the long-run equilibrium? In the short run, both monopolists and competitive firms run, economic profit. True or False: The adjustment to long-run equilibrium takes the same amount of time for monopolies and competitive industries. (Can/Cannot) earn positive economic profits. In the long _(neither/monopolists, but not competitive/both/ competitive but not monopolists) can earn a positive
(2). sketch the pareto-inefficiency and dead weight loss created by monopolist.
Answer the second part
Question 1 ( A monopolist sells Soma at the same price into two different markets. The inverse demand for Soma in market #1 is denoted p1(g) = 15 – q. The demand for Soma in market #2 is given by D2(p) = 80 – 3p. Assume the monopolist's cost function is C(q) = log(1 + q), where q represents the total quantity produced. (Note: (1) log denotes natural logarithm; (2) Round all answers to 2 decimal places.) 1. What is the profit maximizing quantity for the monopolist? 1 Answer:. Justification:
A monopolist is faced with the following cost and revenue curves:(picture) a.What is the maximum-profit price and output,total revenue, total cost and profit? b.If the monopolist were ordered to produce 300 units, what would be the market price and how much profit would now be made c.If the monopolist were faced with the same demand, but average costs were constant at £60 per unit, what output would maximise profit? 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? .................................................................................................................................................. (l) What is the marginal revenue at this…
In Fruitland, strawberries are sold in 4-litre baskets to customers on a "pick-your-own" basis. There are 2 farmers who sell strawberries: Mickey and Kit. There are no costs of supplying strawberries for sale for either farmer, so each has MC = ATC = 0. Profit therefore is simply TR. Market demand for strawberries is given in the accompanying table. If the market were served by a monopolist, the quantity traded would be 125 baskets, the price per 4-litre basket would be $7.50, and the profit for the firm would be $937.50. If Mickey and Kit decided to collude, each would have an individual quantity supplied of 62.5 baskets and each would have profits of $468.75. Suppose Mickey and Kit agree to split the monopoly outcome. Kit, acting in her own self-interest, realizes that she can cheat and supply 87.5 baskets; when she does, Kit's profits are $525.00 and Mickey's profits are $375.00. Mickey decides to retaliate and increases his supply to 87.5 baskets too; when he does, Kit's profits…
Consider a monopolist who chooses to provide special discount to a group of customers with low willingness to pay—say, students, or seniors, or people living in a lower-income country. That kind of behavior cannot be explained by standard microeconomic theory, since a profit-maximizing monopolist would never want to provide any discounts.(a) True. (b) False.