(III. 1) Are the following statements about monopoly true? (Choose “True" or “False")(a) If a monopoly cannot price-discriminate, its profit-maximizing output will be strictly higher than when it canprice-discriminate.True/False(b) If an industry has very high fixed costs, it may be more efficient to allow a monopoly to supply the whole marketrather than several smaller firms, even after we have taken into account the fact that a monopolist will not producethe most efficient quantity.True/False(III. 2) Suppose a monopoly serves a market with a downward-sloping demand curve.(a) If the government charges the monopoly a very high licensing fee (which is independent of the monopoly'soutput) and uses the revenue from the licensing fee to reduce the income tax of all the consumers, the consumersmay be better off but the deadweight loss will belarger than/smaller than/the same as before the tax. (choose the right answer)(b) If the government imposes a 5% tax on the revenue of the monopoly and uses the tax revenue to reduce theincome tax of all consumers, the consumers may be better off but the deadweight loss will belarger than/smaller than/the same as before the tax. (choose the right answer)(III.3) There are three types of consumers of telephone service, with the following marginal utilities:Quantity (Hours of Telephone Call): 1ªMarginal Utility for Type I ($):Marginal Utility for Type II($):Marginal Utility for Type III($):2nd3rd4th5th6th10th 11th 12th.....8.... ...44... ...1111111There are 1 million consumers of each type, and the marginal cost for providing telephone service is zero.Suppose the Telephone Company is a profit-maximizing monopoly.If the Tel.Co. cannot price-discriminate, the price it charges is $_per hour,and it will supplymillion caller-hours of telephone service.If the Tel.Co. can price discriminate perfectly, it charges a type I consumer $_per hour,::::

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(III. 1) Are the following statements about monopoly true? (Choose “True" or “False") (a) If a monopoly cannot price-discriminate, its profit-maximizing output will be strictly higher than when it can price-discriminate. True/ False (b) If an industry has very high fixed costs, it may be more efficient to allow a monopoly to supply the whole market rather than several smaller firms, even after we have taken into account the fact that a monopolist will not produce the most efficient quantity. True/ False

(III. 1) Are the following statements about monopoly true? (Choose “True" or “False") (a) If a monopoly cannot price-discriminate, its profit-maximizing output will be strictly higher than when it can price-discriminate. True/ False (b) If an industry has very high fixed costs, it may be more efficient to allow a monopoly to supply the whole market rather than several smaller firms, even after we have taken into account the fact that a monopolist will not produce the most efficient quantity. True/ False

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose that the quantity of natural gas demanded in a city is 70 billion cubic meters when the price is $0.24 per cubic meter. The table below shows the total costs for a firm supplying natural gas to this market. Is the firm a natural monopoly? Quantity (billion m³) 20 30 40 50 60 70 Total cost ($ billion) 4.5 6. 9.0 12.0 15.5 19.5 No, because two or more firms could satisfy the entire market demand at a lower total cost than a single firm can. No, because two or more firms could satisfy the entire market demand at a lower average total cost than a single firm can. Yes, because a single firm can satisfy the entire market demand at a lower total cost than two or more firms could. Yes, because a single firm can satisfy the entire market demand at a lower average total cost than two or more firms could.
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1) A monopoly faces a demand curve P(Q) = 120 – 2Q, and has a marginal cost of 60. a. What is profit-maximizing level of output? What is the profit-maximizing price? How much profit the firm will make? b. Assume that a second firm enters the market. The new firm has an identical cost function. If the two firms enter in a Cournot competition, what will be the price in equilibrium? How much will each firm produce in equilibrium? How much profit will each firm make? c. If, instead, the two firms compete in a Stackelberg game (assume the incumbent firm is the leader), what will be the price in equilibrium? How much each firm will produce in equilibrium? How much profit will each firm make? d. Now assume the follower has to pay a fixed cost, f =100 if q>0. Does it change the follower's decision? Assume again they are playing a Stackelberg game.? e. The leader knows that the follower has to pay the fixed cost and decides produce one third more than the quantity found in part c). Does it…
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In many countries, the government chooses to "internalize" the monopoly by owning monopoly providers of goods and services. (In some cases these firms are "nationalized" and the government actually buys or confiscates firms that operate in monopoly markets). Explain TWO advantages and TWO disadvantages of such an approach
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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