Scenario 1: Barbara is a producer in a monopoly industry. Her demand curve, total revenue curve, marginal revenue curve, and total cost curve are given as follows: Q = 160 - 4P TR = 40Q- 0.25Q? MR = 40 - 0.,50 TC = 4Q MC = 4 Refer to Scenario 1. The price of her product will be O A. $32. O B. $4. C. $72. O D. $22. O E. $42. O O O OO

Scenario 1: Barbara is a producer in a monopoly industry. Her demand curve, total revenue curve, marginal revenue curve, and total cost curve are given as follows: Q = 160 - 4P TR = 40Q- 0.25Q? MR = 40 - 0.,50 TC = 4Q MC = 4 Refer to Scenario 1. The price of her product will be O A. $32. O B. $4. C. $72. O D. $22. O E. $42. O O O OO

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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How is a legal monopoly different from a natural monopoly? In a legal monopoly, barriers to entry are created by the government. O In a legal monopoly, the monopolist has purchased the necessary certificate from the local government that allows the formation of a monopoly. A legal monopoly applies to government-run institutions, whereas a natural monopoly applies to all other resources O In a legal monopoly, the Federal Trade Commission has paid a firm to be the only producer of a product in a given area. JAN 12 MENU MacBook Air tv N A
Task: monopoly. 1. The market demand for a good (say, Starfleet tricorders) has the market demand 100 2P. Fixed costs for a firm are 20 and variable costs are function of Q(P) VC(Q) = 10Q. = TM Plot the demand, supply, marginal revenue, marginal cost, and average total cost curves (labels!) • Is this a competitive market? How can you tell? • What are the equilibrium quantity and price in this market? Indicate this on the graph. • What are the profits if there are any? Indicate the area on the graph if applicable.
Assuming that the price is greater than the average variable cost, a monopolist maximizes profits at the output for which (picture a graph): O price is equal to marginal revenue in the downward part of the marginal cost curve O marginal cost is equal to marginal revenue in the upward sloping part of the marginal cost curve O average variable cost and average total cost are in the downward part of their curves and price is equal to marginal cost O average total cost is at the lowest point
Explain why it is not possible for a monopoly firm to maximise its profits by charging a price in the price region where demand is inelastic, even though there are no direct substitutes for its product. Also explain how a monopoly will be able to charge a higher price than a firm producing the good under perfect, oligopolistic, or monopolistic competition
In the Cournot model the final level of output is the output that would be produced if the industry was a monopoly, and is the output that would be produced if the industry was perfectly competitive. O a. greater than; less than O b. greater than; equal to Oc. equal to; less than O d. less than; greater than In the Cournot model, when a new firm begins production it assumes its demand curve is O a. the market demand less the amount the other firm is selling. O b. the market demand plus the amount the other firm is selling. Oc. the same as the competing firm's demand curve. O d. one-half of the competing firm's demand curve.
A monopoly firm's total cost is: TC(Q) = Q° + 15Q + 225. if the industry's demand curve is described by P= 195 - 4Q. How much profit will this firm make if it is applying the profit maximizing rule? (Hint: MC = 20 + 15) O a$ 2025 O b.$ 1575 Oc.$ 279 O d. $ 3775 O e.$ 506
While firms in perfect competition maximize profit by producing at a quantity where the marginal cost of producing another unit of a good is equal the the marginal revenue from producing another unit, monopoly firms will maximize profit by producing at a quantity where marginal cost of producing another unit is equal to the marginal revenue (the same as perfect competition) the marginal profit the average total cost O the price of the good 10:04 P Bi 63°F Cloudy 5/20/202 e here to search O
Question 30 Demand: P=120-Q Marginal Revenue: MR=120-2Q Total Cost: TC=Q² Marginal Cost: MC=2Q For this monopolist, the profit-maximizing price is and the profit-maximizing quantity is 90, 30 30, 90 40, 80 None of these answers O O O
3. MUSEUM MONOPOLY MATH Once the museum has incurred the basic operating cost of 60 to open for the day, the average variable cost (and marginal cost) of serving each visitor is only 2. In other words, the museum's total daily operating cost function is DOC[Q] = 60 + 2Q, where Q is the number of visitors. Meanwhile, the inverse demand function for museum admission is P[Q] = 34 - Q. TIP: We used "average daily operating cost" instead of average total cost when discussing museums. a) If this museum were a commercial, profit-maximizing enterprise, then find its profit. TIP: You'll need to find Q* and P*. Even though you could answer this with a well-drawn graph, show that you can "do the math” to find the correct answer. TIP: This may sound familiar. What did you learn about drawing this graph? ☺ b) Suppose the museum manager set the price at 28, which is not the profit-maximizing price. Find its profit. For the remainder of the problem, suppose that the museum is instead a nonprofit…
The figure to the right illustrates market demand for a monopoly along with its average total cost (ATC) curve. Is the monopoly a natural monopoly? The firm O A. is a natural monopoly because its demand curve is downward sloping. O B. is a natural monopoly because it has the potential to earn economic profits. OC. is not a natural monopoly because its demand curve is not infinitely elastic. O D. is not a natural monopoly because it experiences diseconomies of scale. OE E. is a natural monopoly because it can supply the entire market at lower average total cost than can two or more firms. Suppose 14 units of output are supplied in the market. How much lower is the average total cost of production for one firm compared to two firms? One firm can supply 14 units of output for $less per unit in average total cost than two firms. (Enter your response as an integer.) Price and cost (dollars per unit) 10.00- 9.00- 8.00- 7.00- 6.00- 5.00- 4.00- 3.00- 2.00- 1.00- 0.00- 0 2 4 6 ATC Demand 8 10…
The monopoly supply curve is the O same as the competitive market supply curve. O portion of marginal costs curve where marginal costs exceed the minimum value of average variable costs. O result of market power and production costs. O none of the above