Now assume that one of the gyro vendors successfully petitions the neighborhood development board to obtain exclusive rights to sell gyros in the neighborhood. This firm buys up all the rest of the gyro food trucks in the area and begins to operate as a monopoly. Assume that this change does not affect demand and that the marginal cost curve of the new monopoly corresponds exactly to the supply curve from the previous graph. The following graph reflects this new set of assumptions, and shows the demand (D), marginal revenue (MR), and marginal cost (MC) curves for the monopoly vendor. Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and quantity of a monopolist. PRICE (Dollars per gyro) 5.0 4.5 Monopoly Monopoly Outcome 4.0 MC 3.5 3.0 2.5 2.0 1.5 1.0 0.5 MR D 0 0 20 40 60 80 100 120 140 160 180 200 QUANTITY (Gyros) Deadweight Loss ?
Now assume that one of the gyro vendors successfully petitions the neighborhood development board to obtain exclusive rights to sell gyros in the neighborhood. This firm buys up all the rest of the gyro food trucks in the area and begins to operate as a monopoly. Assume that this change does not affect demand and that the marginal cost curve of the new monopoly corresponds exactly to the supply curve from the previous graph. The following graph reflects this new set of assumptions, and shows the demand (D), marginal revenue (MR), and marginal cost (MC) curves for the monopoly vendor. Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and quantity of a monopolist. PRICE (Dollars per gyro) 5.0 4.5 Monopoly Monopoly Outcome 4.0 MC 3.5 3.0 2.5 2.0 1.5 1.0 0.5 MR D 0 0 20 40 60 80 100 120 140 160 180 200 QUANTITY (Gyros) Deadweight Loss ?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Now assume that one of the gyro vendors successfully petitions the neighborhood development board to obtain exclusive rights to sell gyros in the
neighborhood. This firm buys up all the rest of the gyro food trucks in the area and begins to operate as a monopoly. Assume that this change does
not affect demand and that the marginal cost curve of the new monopoly corresponds exactly to the supply curve from the previous graph. The
following graph reflects this new set of assumptions, and shows the demand (D), marginal revenue (MR), and marginal cost (MC) curves for the
monopoly vendor.
Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and quantity of a monopolist.
PRICE (Dollars per gyro)
5.0
4.5
Monopoly
Monopoly Outcome
4.0
MC
3.5
3.0
2.5
2.0
1.5
1.0
0.5
MR
D
0
0 20
40
60
80 100 120 140 160 180 200
QUANTITY (Gyros)
Deadweight Loss
?
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