Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints.Complete the first row of the following table.Pricing MechanismProfit MaximizationMarginal-Cost PricingAverage-Cost PricingSuppose that the governmentShort RunQuantityPrice(Subscriptions) (Dollars per subscription)True6,000O False10,40012,000ProfitComplete the second row of the previous table.Suppose that the government forces the monopolist to set the price equal to average total cost.monopolist to set the price equal to marginal cost.Complete the third row of the previous table.True or False: Over time, the telephone company has a very strong incentive to lower costs when subject to average-cost pricing regulations.Long-Run Decision 7. Regulating a natural monopolyConsider the local telephone company, a natural monopoly. The following graph shows the monthly demand curve for phone services, the company'smarginal revenue (MR), marginal cost (MC), and average total cost (ATC) curves.PRICE (Dollars per subscription)10090228 22880706050403020100.026, 34IMR468 10 12 14QUANTITY (Thousands of subscriptions)16DATCMC1820?

A natural monopoly is a monopoly in an industry wherein high infrastructural costs and different…

Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints. Complete the first row of the following table.. Pricing Mechanism Profit Maximization Marginal-Cost Pricing Average-Cost Pricing Short Run Price Quantity (Subscriptions) (Dollars per subscription) Suppose that the government f 6,000 10,400 + 12,000 False Profit monopolist to set the price equal to marginal cost. Complete the second row of the previous table. Suppose that the government forces the monopolist to set the price equal to average total cost. Complete the third row of the previous table. Long-Run Decision True or False: Over time, the telephone company has a very strong incentive to lower costs when subject to average-cost pricing regulations. O True

Suppose that the government has decided not to regulate this industry, and the firm is free to maximize profits, without constraints. Complete the first row of the following table.. Pricing Mechanism Profit Maximization Marginal-Cost Pricing Average-Cost Pricing Short Run Price Quantity (Subscriptions) (Dollars per subscription) Suppose that the government f 6,000 10,400 + 12,000 False Profit monopolist to set the price equal to marginal cost. Complete the second row of the previous table. Suppose that the government forces the monopolist to set the price equal to average total cost. Complete the third row of the previous table. Long-Run Decision True or False: Over time, the telephone company has a very strong incentive to lower costs when subject to average-cost pricing regulations. O True

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(a) Does a monopolistically competitive firm have an incentive to produce at the level of output that minimizes the average total cost at the long run equilibrium? Explain with a diagram. (b) Suppose CLP Holdings Limited is a natural monopolist with constant marginal cost. Draw a diagram to indicate the profit-maximizing level of output, the profit-maximizing price, and the size of the profit. If the government wants to increase the market efficiency through price regulation, would you suggest the government setting the price equal to the firm’s marginal cost or its average total cost? Explain in detail with the diagram in part (i).
a. what is the optimal quantity of goods for the firm to produce b. what is the optimal price for the quantity of goods for the firm to produce c. what is the total revenue for the firm d. what is the total cost for the firm e. what is profit/loss for the firm
Dear tutor, please solve these multiple questions. Thank You! 11. If the demand shifts, then for a profit maximizing monopolist, A) price will change while quantity will remain constant.B) price will change and quantity will change.C) Both A and B.D) Neither A nor B. 30. A monopolist will spend resources to advertise its product so long as A) net profits increase.B) gross profits increase.C) demand increases.D) total revenue increases. 32. What aspects of a game are specified by "the rules of the game"? A) timing of players' movesB) payoffsC) information available to each playerD) All of the above 33. When neither player has a dominant strategy, A) game theory will not provide information.B) no Nash-Equilibrium exists.C) at least one Nash-Equilibrium exists.D) the game cannot be analyzed.
Question 4 Think a price making firm (monopolist) with a downward-sloping demand curve is one with a price elasticity of demand equal to-1. This is illustrated in the following diagram. P=AR 20 Expenditure stays the same as price changes TR AR = = Q d (TR) dQ Slope = b/Q 40 100 Diagram 5 Unit elastic demand (Pe=-1) MR = As price and quantity change by the same proportion, total revenue is the same at each price (the TR curve is horizontal). This gives the following TR, AR and MR equations: TR=b b -D (AR) Q = 0 Q As TR is constant at all outputs, so MR must equal zero. In diagram 5, what is the value of b in equation TR=b?
Figure monopolist, to answer questions a-c. a. indicate the profit maximizing price and output level and label them P 1 and Q 1. b. Shade in the area that represents the firm's economic profit (or loss). c. If this firm wished to discourage entry by other firms it could produce the output level at which it earns only a zero economic profit. Indicate the price and output level associated with a zero economic profit and label them P 2 and Q 2.
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The graph to the right includes a monopolist's demand, marginal revenue, average total cost, and marginal cost curves. 1.) Use the point drawing tool to Indicate the profit-maximizing level of output and price. Label this point 'Point A' 2.) Use the rectangle drawing tool to shade in economic profitsLabel this shaded area 'Profit'. Carefully follow the instructions above, and only draw the required objects.
Suppose that the monopolist's demand is: P = 8 – Q, and marginal revenue is: MR = 8 – 2Q. - The marginal cost is: MC = 2, and there is no fixed cost. a.Find out the profit maximizing output level. b.Specify the amount of economic profit or loss at the profit maximizing output. c.Calculate the price elasticity of demand at the profit maximizing point and explain it.
The diagram at right shows the demand curve, marginal revenue curve, and cost curves for a single-price monopolist that owns the only golf courses on Eagle Island. The monopolist's product is 18-hole golf games. a. Now suppose the monopolist is able to charge a different price on each different unit sold. What would be the total number of rounds of golf sold per week? rounds. (Round your response to the The total number of rounds sold per week is 600 nearest whole number) What would be the price on the last round sold? The price on the last round sold is $200 (Round your response to the nearest dollar) b. What is the value of the consumer surplus if the monopolist cannot price discriminate at all? The value of the consumer surplus is $ 40000 (Round your response to the nearest dollar) c. What is the value of the consumer surplus when the monopolist is practicing this "perfect price discrimination? The value of the consumer surplus is $ (Round your response to the nearest dollar) Price…
Please indicated each statement as correct or incorrect..
Give typing answer with explanation and conclusion Suppose that a monopolist whose marginal cost curve is MC(Q)=Q faces the demand curve P=10-2Q. What is monopolist's profit-maximizing quantity, profit-maximizing price, the total surplus (under monopoly profit maximization), also called the "monopoly market surplus," and if the monopolist can perfectly price discriminate, then deadweight loss equals...?