State whether the following statements are true or false, and explain why. a. Perfectly competitive firms have no control over the price they charge for their product. b. For a natural monopoly, average cost declines as the number of units produced increases over the relevant output range. c. An oligopolist has a larger than average portion of total market share without having to do any advertising.

State whether the following statements are true or false, and explain why. a. Perfectly competitive firms have no control over the price they charge for their product. b. For a natural monopoly, average cost declines as the number of units produced increases over the relevant output range. c. An oligopolist has a larger than average portion of total market share without having to do any advertising.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

A perfectly competitive firm is expected to make a $0 economic profit in the long-run. What type(s) of profit would you expect a monopolist to earn in the long-run? Why the difference? Use the editor to format your answer
When Pfizer registers its latest drug patent application, it will have created a monopoly for that product by restricting ____ a)entry into the market. b)amount of product advertising. c)the number of product compliments. d)demand for the product.
Is a monopoly always bad for society? Question 6 options: None of the other answers is correct Yes. Monopoly is always bad Monopoly is not bad if its owner gives back to society in charity No. For example, patents on medications create monopolies, and increase the price and reduce the quantity sold, but without them, no one would take the high costs of developing new drugs and the quantity will be... zero!
Please Answer part f . please draw the complete graph Suppose a monopolist faces demand D = 6 − Q and MR = 6 − 2Q, and has costs T C = 1 + 2Q, and MC = 2. The monopolist is unable to price discriminate. a. Derive the ATC. Is this a natural monopoly and why?. b. Draw the demand curve, MR, MC, ATC on a graph. Make sure to label the curves and axes clearly Calculate the value of the optimal Q and P. Label this on the graph of the previous question (part b). d. Calculate the value of the profit at this point. Also label this on the graph (part b). e. The government’s antitrust division determines this monopoly has too much market power. It has two options: break the monopoly into two smaller companies, or regulate it using a price ceiling. Which should it do and why?. f. The government has decided to enact the price ceiling. On the graph, label the price ceiling that maximizes consumer surplus. Indicate this consumer surplus on the graph (part b).
**YOU ONLY HAVE TO ANSWER QUESTION H**
Use the following Table showing the demand schedule for a monopolist facing a constant marginal cost of $4. Assume that the firm pays no fixed costs. How many units of output will the firm produce, and how much economic profit will be earned? Quantity Demanded 1 2 3 4 5 6 7 8 9 Price $12 $11 $10 $9 $8 $7 $6 $5 $4 A) 5 units; $8 B) 5 units; $40 C) 7 units; $36 D) 7 units; -$6 E) 5 units; $20
A monopolist is able to maintain into the long run primarily because a. barriers to entry exist b. of collusive behavior c. of mutual interdependence d. of price taking behavior e. of product differentiation
Your textbook covered 4 possible ways to deal with a natural monopoly. Which approach would be best for consumers? Group of answer choices Regulators would force the monopolist to set its price equal to its marginal cost. Let the natural monopoly charge enough to cover its average costs and earn a normal rate of profit. Regulators would allow the monopolist to continue with no government regulation. Regulators would split the monopolist into two competing firms.
How does monopoly compare with pure competition in terms of price, output, and efficiency? Explain.
Price and cost (dollars per unit) PI P2 P3 0 MR 외 Q2 Q3 Quantity (units per hour) Which of the following is true? In the above figure, if the market is S=MC a monopoly, output will be Q1 and price will be P3. perfect competition, output will be Q2 and price will be P2. perfect competition, output will be Q3 and price will be P3. a monopoly, output will be Q3 and price will be P3.
In this question, I ask you to consider the market for flights from Seattle to Fresno (California). Alaska Airlines have a monopoly on this route. There are two types of travellers. Leisure travellers derive a value of $200 from flying this route if the itinerary includes a Saturday night stay, and $175 if the itinerary doesn’t include a Saturday night stay. Business travellers derive a value of $100 from flying this route if the itinerary includes a Saturday night stay, and $450 if the itinerary doesn’t include a Saturday night stay. What prices do you suggest that Alaska charge for itineraries that include a Saturday night stay, and those that do not include a Saturday night stay?How might business travellers respond to the pricing strategy you suggested?
MONOPOLISTIC COMPETITION 1. Suppose that the cost of production is given by the following function: CT = 100 + Q2 and that the demand is given by P = 80 - Q. a. Determine the level of maximization.b. Determine the value of CT and ITc. Check that the IMg = CMg CT (Total cost) IMg (marginal income) CMg (marginal cost) Algebraically if the demand curve in the monopoly is a function of quantity, the demand curve is a straight line. P = a - bQWhere a is the ordinate to the origin, b the slope and Q the quantitySo if IT = P x QWe have that (a - bQ) Q = aQ - bQ2IT = aQ - bQ2And therefore the marginal income is the derivative of IT or what is equal to the variation of total income between the variation of the quantity.Therefore the IMg = derive the quantity in the function aQ - bQ2IMg = a - 2bQ Consider these functions when conducting monopoly exercises.