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Price and cost AVC $5.50 5.00 4.50 3.00 2.00 1.75 Quantity 55 110 165 MR questions 10-13 Use monopoly market graph above What would be the competitive price? What would be the monopoly price? Assume antitrust regulators required this firm to charge a price where average total costs are minimized, what is tha price? Why wouldn't regulators require firms to produce where ATC meets demand?

Price and cost AVC $5.50 5.00 4.50 3.00 2.00 1.75 Quantity 55 110 165 MR questions 10-13 Use monopoly market graph above What would be the competitive price? What would be the monopoly price? Assume antitrust regulators required this firm to charge a price where average total costs are minimized, what is tha price? Why wouldn't regulators require firms to produce where ATC meets demand?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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### Monopoly Market Graph Analysis The provided monopoly market graph displays several essential curves and points in microeconomic theory. Below is the description and detailed explanation of each component of the graph: #### Graph Description The graph includes the following: - **MC (Marginal Cost) Curve**: This is the upward-sloping curve. - **ATC (Average Total Cost) Curve**: This is a U-shaped curve, starting high, declining to its minimum point, then rising again. - **AVC (Average Variable Cost) Curve**: This U-shaped curve lies below the ATC. - **D (Demand) Curve**: This downward-sloping curve represents the relationship between price and quantity demanded. - **MR (Marginal Revenue) Curve**: This downward-sloping curve lies below the demand curve. - Three horizontal dashed lines indicating different prices: - The highest line is at the intersection of the MC and Demand curves. - The middle line shows where MR equals MC. - The lowest line signifies the minimum of the ATC curve. - Three vertical dashed lines representing different quantities: - The left-most line (55 units) aligns with where MR equals MC. - The middle line (110 units) corresponds to the minimum ATC. - The right-most line (165 units) intersects with the demand curve at the competitive price. #### Questions and Answers 10. **What would be the competitive price?** - The competitive price is where the Demand curve intersects the MC curve, which is about $3.50. 11. **What would be the monopoly price?** - The monopoly price is determined where the MR curve intersects the MC curve, corresponding to the price on the Demand curve at that quantity, which is about $5.00. 12. **Assume antitrust regulators required this firm to charge a price where average total costs are minimized, what is that price?** - If regulators required the firm to charge a price at the minimum ATC, the price would be about $3.00. 13. **Why wouldn’t regulators require firms to produce where ATC meets demand?** - Regulators may not require production where ATC meets demand because it may not align with allocative efficiency or could lead to production levels not sustainable for the firm in the long run, leading to potential losses and exit from the market. 14. **Assume this firm is able to perfectly price discriminate, what would happen
Transcribed Image Text:### Monopoly Market Graph Analysis The provided monopoly market graph displays several essential curves and points in microeconomic theory. Below is the description and detailed explanation of each component of the graph: #### Graph Description The graph includes the following: - **MC (Marginal Cost) Curve**: This is the upward-sloping curve. - **ATC (Average Total Cost) Curve**: This is a U-shaped curve, starting high, declining to its minimum point, then rising again. - **AVC (Average Variable Cost) Curve**: This U-shaped curve lies below the ATC. - **D (Demand) Curve**: This downward-sloping curve represents the relationship between price and quantity demanded. - **MR (Marginal Revenue) Curve**: This downward-sloping curve lies below the demand curve. - Three horizontal dashed lines indicating different prices: - The highest line is at the intersection of the MC and Demand curves. - The middle line shows where MR equals MC. - The lowest line signifies the minimum of the ATC curve. - Three vertical dashed lines representing different quantities: - The left-most line (55 units) aligns with where MR equals MC. - The middle line (110 units) corresponds to the minimum ATC. - The right-most line (165 units) intersects with the demand curve at the competitive price. #### Questions and Answers 10. **What would be the competitive price?** - The competitive price is where the Demand curve intersects the MC curve, which is about $3.50. 11. **What would be the monopoly price?** - The monopoly price is determined where the MR curve intersects the MC curve, corresponding to the price on the Demand curve at that quantity, which is about $5.00. 12. **Assume antitrust regulators required this firm to charge a price where average total costs are minimized, what is that price?** - If regulators required the firm to charge a price at the minimum ATC, the price would be about $3.00. 13. **Why wouldn’t regulators require firms to produce where ATC meets demand?** - Regulators may not require production where ATC meets demand because it may not align with allocative efficiency or could lead to production levels not sustainable for the firm in the long run, leading to potential losses and exit from the market. 14. **Assume this firm is able to perfectly price discriminate, what would happen
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