### Monopolist Pricing and Output Decisions#### Diagram Analysis:The diagram above illustrates a monopolist's pricing and output decisions. The vertical axis represents the price per unit ($/unit), and the horizontal axis represents the output. Several key lines and areas within the graph are labeled as follows:- **Demand (AR)**: The downward-sloping line representing the average revenue or demand curve.- **MR**: The marginal revenue curve, which also declines but at a faster rate than the AR curve.- **AC = MC**: The monopolist's average and marginal cost curve, which is depicted as a horizontal line in this simplified scenario.- **P₁**: The price level where the demand curve intersects.- **P***: The equilibrium price level in a perfectly competitive market where demand equals supply.- **Q₁**: The profit-maximizing output level for the monopolist.- **Q***: The output level under perfect competition. The areas on the graph, labeled A, B, C, D, E, F, G, and H, represent different consumer and producer surpluses under various conditions.#### Questions and Answers:**15) Market Demand Curve and Monopolist Output Decisions:**If the demand curve represents the market demand curve and the monopolist **cannot price discriminate** or use **two-part tariffs**, then the deadweight loss, the profit-maximizing output, and the price will be equal to, respectively:- a) Areas B + D, P₁, and Q₁- b) Areas E + G, P*** and Q***- c) Area E, P₁, and Q₁- d) Areas E + G, P₁, and Q₁ **Solution:** The correct answer is **d) Areas E + G, P₁, and Q₁**.**Explanation:**- **Deadweight Loss** (DWL): The area E + G represents the loss in total surplus due to monopoly pricing, where the quantity produced is less than the socially efficient quantity (Q***).- **Profit-Maximizing Output**: The monopolist produces at Q₁ where MR equals MC.- **Market Price**: The monopolist sets the price at P₁, at the demand curve corresponding to the output level Q₁.**16) Two-Part Tariffs and Consumer Surplus:**If the

When the monopolist cannot price discriminate and the monopolist cannot charge two part tariff, then…

Questions 15 and 16 refer to the diagram given below. $/unit P₁ P A C a) Areas B+ D, P₁, and Q b) Areas E+G, P, and Q c) Area E, P₁, and Q₁ d) Areas E + G, P, and Q₁ a) Areas A + B b) Areas C+D+E c) Areas E + G d) Zero B F D V Q₁ E C H Qº MR AC MC Demand -AR 15) If the demand curve represents the market demand curve and the monopolist cannot price discriminate or use two-part tariffs then the deadweight loss, the profit maximising output and the price will be equal to, respectively: Output 16) If the demand curve represents the individual demand for the typical buyer and the monopolist uses two-part tariffs to maximise profit, then consumer surplus is

Questions 15 and 16 refer to the diagram given below. $/unit P₁ P A C a) Areas B+ D, P₁, and Q b) Areas E+G, P, and Q c) Area E, P₁, and Q₁ d) Areas E + G, P, and Q₁ a) Areas A + B b) Areas C+D+E c) Areas E + G d) Zero B F D V Q₁ E C H Qº MR AC MC Demand -AR 15) If the demand curve represents the market demand curve and the monopolist cannot price discriminate or use two-part tariffs then the deadweight loss, the profit maximising output and the price will be equal to, respectively: Output 16) If the demand curve represents the individual demand for the typical buyer and the monopolist uses two-part tariffs to maximise profit, then consumer surplus is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: 1. Assume the cost of making 30 belts is $800, the cost of making 35 $910, and the cost equation is…

A: Marginal cost measures the change in total cost due to a change in quantity produced. Marginal cost…

Q: List the "Ceteris Paripus" variables that affect demand and illustrate a shift in a Demand Curve.…

A: A shift in demand is referred to as a change in demand where the entire demand curve shifts so that…

Q: City Beautiful Brewer is a beer maker in Orlando that produces and sells four varieties of beer.…

A: Total revenue refers to the revenue from sales at different levels of output.Average cost refers to…

Q: Look at the hospital cost data in the "Cost Curve" slides (slide 13). To interpret this data: the…

A: The cost function is a method of assessing "our algorithm's/performance." It compares the model's…

Q: lim's Camera shop sells two high-end cameras, the Sky Eagle and Horizon. The demand for these two…

A: There are two types of cameras : Sky eagle (s) & Horizon (H) Demand function of S : Ds = 225 -…

Q: B) both B and C both A and C Figure A D) both A and B E) only D X Figure B Figure C 26) In the…

A: When an increase in the independent variables leads to an increase in the dependent variable, or…

Q: Your friend Claire has been designing her own hoodies and giving them as gifts to friends and…

A: The objective of the question is to understand the relationship between the selling price of the…

Q: 13. (Section 4.4) The weekly revenue, R(r), in thousands of dollars, t weeks after January 1st, for…

A: Revenue refers to the money that is generated from a specific business operation, that is calculated…

Q: 1. First, locate the equilbrium price and quantity. Which lettered regions in the graph represent…

A: We will make some certain assumptions. Firstly, the demand(DD) for the energy drink is highly likely…

Q: You can think of the result in any one game as being Eric's marginal free-throw percentage. Based on…

A: Both Average Cost and Marginal Cost are derived from Total Cost Average Cost = Total Cost / Quantity…

Q: 14. Has social media engagement with JTS positively influenced your perception of the company? 10…

A: The pie chart in the proposal reflects respondents' perceptions of the impact of social media…

Q: None

A: Step 1: Plotting the weekly total revenue when the market price is $50, $75, $100, $125, $150, $175,…

Q: To water their vine yards, a group of farmers in Cyprus drill identical wells and draw irrigation…

A: Note: “Since you have posted a question with multiple sub-parts, we will provide the solution only…

Q: help please answer in text form with proper workings and explanation for each and every part and…

A: Answer information:Step 1:1.ParticularsJerry Inc ($)Don Inc. ($)Customer unit level Cost Sales…

Q: Month and Cleaned April May June July August September October Miles Mowed Labor Costs 240 $6,800…

A: High-volume month (June):Units produced = 325Labor cost = $8,310Low-volume month (October):Units…

Q: Read the following scenario carefully and then answer the following questions and perform the…

A: Demand curve: The demand curve for a good that are people addicted towards will be a highly…

Q: Please see attached.

Q: The blue line on the following graph shows a firm's daily costs for the first 90 days of the fiscal…

A: Introduction :- Given :- A graph showing firms daily cost.The expenses of the firm are given on y…

Q: Using the data in the table below, calculate Aggregate Expenditure (AE), Savings (S), and increasing…

A: Aggregate expenditure:It is the value of all the products and services produced in an economy in a…

Q: Can you help me graph that information

A: Approach to solving the question:Detailed explanation: Examples: Key references:

Q: As the manager of Lewis Inc., a company that produces lamps, you conducted a study of the production…

A: We have given the short-run production and output schedule of a competitive firm that produces…

Question

### Monopolist Pricing and Output Decisions

#### Diagram Analysis:
The diagram above illustrates a monopolist's pricing and output decisions. The vertical axis represents the price per unit ($/unit), and the horizontal axis represents the output. Several key lines and areas within the graph are labeled as follows:

- **Demand (AR)**: The downward-sloping line representing the average revenue or demand curve.
- **MR**: The marginal revenue curve, which also declines but at a faster rate than the AR curve.
- **AC = MC**: The monopolist's average and marginal cost curve, which is depicted as a horizontal line in this simplified scenario.
- **P₁**: The price level where the demand curve intersects.
- **P***: The equilibrium price level in a perfectly competitive market where demand equals supply.
- **Q₁**: The profit-maximizing output level for the monopolist.
- **Q***: The output level under perfect competition.

The areas on the graph, labeled A, B, C, D, E, F, G, and H, represent different consumer and producer surpluses under various conditions.

#### Questions and Answers:

**15) Market Demand Curve and Monopolist Output Decisions:**

If the demand curve represents the market demand curve and the monopolist **cannot price discriminate** or use **two-part tariffs**, then the deadweight loss, the profit-maximizing output, and the price will be equal to, respectively:

- a) Areas B + D, P₁, and Q₁
- b) Areas E + G, P*** and Q***
- c) Area E, P₁, and Q₁
- d) Areas E + G, P₁, and Q₁

**Solution:** The correct answer is **d) Areas E + G, P₁, and Q₁**.

**Explanation:**
- **Deadweight Loss** (DWL): The area E + G represents the loss in total surplus due to monopoly pricing, where the quantity produced is less than the socially efficient quantity (Q***).
- **Profit-Maximizing Output**: The monopolist produces at Q₁ where MR equals MC.
- **Market Price**: The monopolist sets the price at P₁, at the demand curve corresponding to the output level Q₁.

**16) Two-Part Tariffs and Consumer Surplus:**

If the

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Part 15. Introduction

VIEW

Step 2: Part 15. Correct option

VIEW

Step 3: Part 16.

VIEW

Solution

VIEW

Step by step

Solved in 4 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

(3 points) When sold for $259,000.00, Ferraris have an annual supply of 6758 vehicles and an annual demand of 6691 vehicles. When their price increases to $279,000.00, the annual supply increases to 6913, and the demand decreases to 6010 billion gallons. (a) Assuming that the supply and demand equations are linear, Afind the supply and demand equations. Supply Equation p = Demand Equationp (Note: The equations should be in the form p = mg + b where p denotes the price (in dollars) and q denotes the quantity. The slope and y-intercept should be accurate to two decimal places). (b) Find the Equilibrium price and quantity. Equilibrium price p = Equilibrium quantity q = (Note: The equilibrium price and quantity should be accurate to two decimal places, and the equilibrium price should include a dollar sign).
Q.3 - An economist has estimated demand of D = 1000 − P and Supply of S = 400 + 10R for onions, where R is the number of days of rainfall. (a) Plot the demand and supply curves. (b) Show the equilibrium quantity and the equilibrium price on the graph. (c) Use Algebra to determine the equilibrium price and quantity (d) Use a new graph of demand and supply curves to show the effect of an increase in rainfall
Greenhouse gases trap heat and make the planet warmer. Human activities are responsible for almost all of the increase in greenhouse gases in the atmosphere over the last 150 years. In this part, you will draw two pie graphs. A pie graph is used to show how a certain quantity has been divided into several parts, as well as to show the comparisons among these parts. 1. The data table below shows the total U.S. greenhouse gas emissions by economic sector in 2013, in million metric tons of CO2. On the pie graph provided, complete the graph to show the percent of greenhouse gas emissions for each economic sector. Label each section of the pie graph with its economic sector. The percent for "Agriculture" has been drawn and labeled for you. Economic Sector Electricity Transportation Industry Commercial & Residential Agriculture Percent of Greenhouse Gas Emissions 31 27 21 12 9 80 75 70- 85 65 95 90 wlad Percent 0 100 Agri- culture 55 50 45 10 40 35 20 25 30
None
OCHESTER 1. (12 points) Supply and Demand for Riesling The Finger Lakes region of New York State is known for its Rieslings. The demand function for bottles of wine from this region (in 100,000s) has two variables average annual income of purchasers. The functional form is: Qd=-2Pd-5+0.0011, where the price of wine and the Qd is quantity sold, Pd is the price of one bottle of wine, and I is equal to average income. Assume average annual income today is $30,000. A) (3 points) Calculate and plot the demand curve. B) (3 points) Calculate and plot the demand curve for I = $35,000 on the same graph as used in part a. == C) (6 points) Now assume a supply curve, Qs = 25P, - 175. Plot the supply curve on the same graph. Compute the equilibrium prices and quantities for the two demand curves.
Marketing surveys conducted by the sales manager for a company determined that 3,000 power drills could be sold for $60 each, but 4,000 drills could be sold for $50 each. (a) If the two data points were plotted on a coordinate system with the number of drills sold on the horizontal axis and the price of each drill on the vertical axis, what is the slope of the line between the two points? (b) Write a sentence that explains the result in part (a) in the context of this problem. For every additional drill sold, the price per drill (in cents) decreases by cent(s). (c) Assuming the trend in part (a) continues, how many drills can be sold for $56? drills
What is the optimal number of clusters based on this graph? Average silhouette width 0.3 0.2 0.1 0.0- 07 02 05 O 10 Optimal number of clusters Silhouette method 12 3 6 7 4 5 Number of clusters k 8 9 10