The accompanying diagram shows demand and long-run cost conditions in a price-searcher market with high barriers to entry. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity. Then, use the gray rectangle (star symbols shade the area corresponding to the profit or losses in this industry. PRICE 3 2 0 MC 1 2 3 RATC MR 4 QUANTITY 5 D 6 7 8 ++ Monopoly Outcome Profit or Loss ?

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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The accompanying diagram shows demand and long-run cost conditions in a price-searcher market with high barriers to entry.
Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity. Then, use the gray rectangle (star symbols) to
shade the area corresponding to the profit or losses in this industry.
PRICE
7
6
5
2
1
0
MC
3
RATC
MR
4
QUANTITY
5
D
6
7
8
+
Monopoly Outcome
Profit or Loss
Transcribed Image Text:The accompanying diagram shows demand and long-run cost conditions in a price-searcher market with high barriers to entry. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity. Then, use the gray rectangle (star symbols) to shade the area corresponding to the profit or losses in this industry. PRICE 7 6 5 2 1 0 MC 3 RATC MR 4 QUANTITY 5 D 6 7 8 + Monopoly Outcome Profit or Loss
Critical Analysis Questions (Ch 11)
PRICE
5
3
2
1
0
MO
0.
1
2
3
LRATC
MR
4
QUANTITY
5
D
Profit or Loss
Which of the following would best describe why an industry is likely to be monopolized?
The industry has a downward-sloping demand curve.
The marginal cost exceeds the long-run average total cost.
The marginal cost curve intersects the demand curve at the profit maximizing quantity.
The long-run average total cost curve is downward sloping at any level of output that the market would demand.
Transcribed Image Text:Critical Analysis Questions (Ch 11) PRICE 5 3 2 1 0 MO 0. 1 2 3 LRATC MR 4 QUANTITY 5 D Profit or Loss Which of the following would best describe why an industry is likely to be monopolized? The industry has a downward-sloping demand curve. The marginal cost exceeds the long-run average total cost. The marginal cost curve intersects the demand curve at the profit maximizing quantity. The long-run average total cost curve is downward sloping at any level of output that the market would demand.
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