Confused and unsure how to solve these problems correctly Place the black point (plus symbol) on the following graph to indicate the profit-maximizing priceand quantity of a monopolist. Use the green points (triangle symbol) to shade the area thatrepresents consumers' surplus, and use the purple points (diamond symbol) to shade the area thatrepresents producers' surplus.PRICE (Dollars per hot dog)229 2 2 3 3 2 2 -5.04.54.03.53.02.52.01.51.00.5MonopolyMRMCD20 50 100 150 200 250 300 350 400 450 500QUANTITY (Hot dogs)MonopolyMonopoly OutcomeAConsumers' SurplusProducers SurplusPriceMarket Structure (Dollars)Perfectly CompetitiveConsider the welfare effects when the industry operates under a perfectly competitive marketversus a monopoly.Deadweight LossOn the monopoly graph, use the black points (plus symbol) to shade the area that represents theloss of welfare from a monopoly, or deadweight loss. That is, show the area that was formerlyproducers' surplus or consumers' surplus and now does not accrue to anybody.(?)Deadweight loss occurs when a monopoly controls a market because the resulting equilibrium isdifferent from the perfectly competitive outcome, which is efficient.In the following table, enter the price and quantity that would arise in a perfectly competitivemarket; then enter the profit-maximizing price and quantity that would be chosen if a monopolistcontrolled this market.Quantity(Hot dogs)Given the summary table of the two different market structures, you can infer that, in general, theprice is higher under a, and the quantity is higher under a Consider the daily market for hot dogs in a small city. Suppose that this market is in long-runperfectly competitive equilibrium, with many hot dog stands in the city, each one selling the samekind of hot dogs. Therefore, each vendor is a price taker and possesses no market power.The following graph shows the demand (D) and supply curves (S = MC) in the market for hot dogs.Place the black point (plus symbol) on the graph to indicate the market price and quantity that willresult from perfect competition. Use the green point (triangle symbol) to shade the area thatrepresents consumers' surplus, and use the purple point (diamond symbol) to shade the area thatrepresents producers' surplus.PRICE (Dollars per hot dog)5.04.54.03.53.0 +2.52.01.51.00.500Perfectly Competitive Market50S-MCD100 150 200 250 300 350 400 450 500QUANTITY (Hot dogs)++PC OutcomeAConsumers' Surplus◇Producers' SurplusAssume that one of the hot dog vendors successfully lobbies the city council to obtain the exclusiveright to sell hot dogs within the city limits. This firm buys up all the rest of the hot dog vendors inthe city and operates as a monopoly. Assume that this change doesn't affect demand and that thenew monopoly's marginal cost curve corresponds exactly to the supply curve on the previousgraph. Under this assumption, the following graph shows the demand (D), marginal revenue (MR),and marginal cost (MC) curves for the monopoly firm.Place the black point (plus symbol) on the following graph to indicate the profit-maximizing priceand quantity of a monopolist. Use the green points (triangle symbol) to shade the area thatrepresents consumers' surplus, and use the purple points (diamond symbol) to shade the area thatrepresents producers' surplus.(?)

Equilibrium is the point where firm's objective is maximized, and no one wants to deviate from that…

Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and quantity of a monopolist. Use the green points (triangle symbol) to shade the area that represents consumers' surplus, and use the purple points (diamond symbol) to shade the area th represents producers' surplus. PRICE (Dollars per hot dog) 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0 Monopoly MR MC D 0 50 100 150 200 250 300 350 400 450 500 QUANTITY (Hot dogs) Monopoly Outcome Market Structure Perfectly Competitive Monopoly A Consumers' Surplus Producers' Surplus Deadweight Loss Consider the welfare effects when the industry operates under a perfectly competitive market versus a monopoly. On the monopoly graph, use the black points (plus symbol) to shade the area that represents the loss of welfare from a monopoly, or deadweight loss. That is, show the area that was formerly producers' surplus or consumers' surplus and now does not accrue to anybody. (?) Deadweight loss occurs when a monopoly controls a market because the resulting equilibrium is different from the perfectly competitive outcome, which is efficient. Price Quantity (Dollars) (Hot dogs) In the following table, enter the price and quantity that would arise in a perfectly competitive market; then enter the profit-maximizing price and quantity that would be chosen if a monopolist controlled this market. Given the summary table of the two different market structures, you can infer that, in general, the price is higher under a and the quantity is higher under a 1

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC