quium with many gyro vendors in the neighborhood, each offering basically the same gyros. Due to the structure of the market, the vendors ad The following graph displays the supply (SMC) and demand (0) curves in the wookly market for gyros Place the black (bol) on the graph to indicate the market price and quantity that will result from competition 48 ***** as QUANTITY() ghborhood. This fem 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 comesponds exactly to the supply carve from the previous graph. The of assumptions, and shows the demand (D), marginal revenue (H), and and marginal cost (MC) curves for the Monopoly Monopoly + PC Out Quantity Market Structure (Dollars) (Gyros) puty Outume Delight Le Consider the welfare effects that result from the industry operating as a competitive market vara monopoly ? the black points (plus symbo) to shade the area that represents the loss of wear, or deadwght , ched by a competitive market; then enter the profit maximizing price and quantity that

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Consider the weekly market for gyros in a popular neighborhood close to campus. Suppose this market is operating in long-run competitive
equilibrium with many gyro vendors in the neighborhood, each offering basically the same gyros. Due to the structure of the market, the vendors act
as price takers and each individual vendor has no market powur.
The following graph displays the supply (SMC) and demand (D) curves in the weekly market for gyros
Place the black point (plus symbol) on the graph to indicate the market price and quantity that will result from competition.
5.0
AD
26 28 30
35
30
as
15
10
45
50
4.5
40
as
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 fiem 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 (HR), and marginal cost (MC) curves for the
monopoly vendor.
34
Place the black point (plus symbol) on the following graph to indicate the profit-maximining price and quantity of a monopolt.
(7)
2.5
20
15
.
14
2
Compar
•
T
105 140 175 210 243 280 315300
QUANTITY()
S-MC
Monopoly
MRK
Competitive
Monopoly
+
QUANTITY (G)
PC O
(?
Price
Quantity
Market Structure (Dollars) (Gyros)
Manopoly Quicum
Deadweight L
Consider the welfare offects that result from the industry operating as a 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, or deadweight loss, caused by a
monopoly. That is, show the area that was formerly part of total surplus and now does not accrue to anybody.
Deadweight loss occurs when a market is controlled by a monopoly because the resulting equilibrium is different from the (efficient) competitive
outcome.
In the following table, enter the price and quantity that would arise in a competitive market; then enter the profit-maximizing price and quantity that
would be chosen if a manopolist controlled this market.
Given the summary table of the two different market structures, you can infer that, in general, the price is lower under a
and the quantity is lower under a
Transcribed Image Text:Consider the weekly market for gyros in a popular neighborhood close to campus. Suppose this market is operating in long-run competitive equilibrium with many gyro vendors in the neighborhood, each offering basically the same gyros. Due to the structure of the market, the vendors act as price takers and each individual vendor has no market powur. The following graph displays the supply (SMC) and demand (D) curves in the weekly market for gyros Place the black point (plus symbol) on the graph to indicate the market price and quantity that will result from competition. 5.0 AD 26 28 30 35 30 as 15 10 45 50 4.5 40 as 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 fiem 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 (HR), and marginal cost (MC) curves for the monopoly vendor. 34 Place the black point (plus symbol) on the following graph to indicate the profit-maximining price and quantity of a monopolt. (7) 2.5 20 15 . 14 2 Compar • T 105 140 175 210 243 280 315300 QUANTITY() S-MC Monopoly MRK Competitive Monopoly + QUANTITY (G) PC O (? Price Quantity Market Structure (Dollars) (Gyros) Manopoly Quicum Deadweight L Consider the welfare offects that result from the industry operating as a 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, or deadweight loss, caused by a monopoly. That is, show the area that was formerly part of total surplus and now does not accrue to anybody. Deadweight loss occurs when a market is controlled by a monopoly because the resulting equilibrium is different from the (efficient) competitive outcome. In the following table, enter the price and quantity that would arise in a competitive market; then enter the profit-maximizing price and quantity that would be chosen if a manopolist controlled this market. Given the summary table of the two different market structures, you can infer that, in general, the price is lower under a and the quantity is lower under a
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