QUESTION 6 You are the manager of a monopoly that faces an inverse demand curve described by P = 200 – 15Q. Your costs are C = 15 + 20Q. - Instructions: Round up your answers to no decimals. Do not round values to complete other calculations. The profit-maximizing output for your firm is: The profit-maximizing price for your firm is: Profits = $

QUESTION 6 You are the manager of a monopoly that faces an inverse demand curve described by P = 200 – 15Q. Your costs are C = 15 + 20Q. - Instructions: Round up your answers to no decimals. Do not round values to complete other calculations. The profit-maximizing output for your firm is: The profit-maximizing price for your firm is: Profits = $

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

When a company and its products dominate a sector or an industry, it is termed a monopoly. When a firm and its products control a market, then it is called a monopoly.

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The following diagram illustrates the demand curve facing a monopoly in an industry with no economies or diseconomies of scale and no fixed costs. In the short and long run, MC = ATC. 1.) Using the point drawing tool, indicate the monopoly output and monopoly price (Monopoly) in the figure to the right. Attach the appropriate provided label. 2.) Using the rectangle drawing tool, shade in monopoly profits (Profit). Attach the appropriate provided label. 3.) Using the triangle drawing tool, shade in the "excess burden" or "welfare costs" of the monopoly (Excess burden). Attach the appropriate provided label. Note: Carefully follow the instructions above and only draw the required objects. The monopoly creates excess burden because O A. it produces where price equals marginal cost. B. it produces an inefficiently large amount of output. O C. it charges a price that is too low. D. it produces where marginal cost is positive. E. it produces where price is above marginal cost. MR Output, Q…
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