In order to maximize profits, a monopolist would choose to produce units which is less than the socially optimal quantity of units. Price 30 MC 23 20 15 ATC 12 10 6. D 9 12 15 \MR Quantity O A. 9; 12 О в. 12: 15 OC 9: 15 O D. 12; more than 15

In order to maximize profits, a monopolist would choose to produce units which is less than the socially optimal quantity of units. Price 30 MC 23 20 15 ATC 12 10 6. D 9 12 15 \MR Quantity O A. 9; 12 О в. 12: 15 OC 9: 15 O D. 12; more than 15

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter16: Government Regulation

Section: Chapter Questions

Problem 10E

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Question

In order to maximize profits, a monopolist would choose to produce
units which is less than the socially optimal quantity of
units.
Price
30
MC
23
20
15
ATC
12
10
9 12
15
\MR
Quantity
O A. 9; 12
B. 12; 15
OC. 9: 15
O D. 12; maore than 15

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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…
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