The figure to the right shows the average total cost curve for a firm producing electricity and the total demand for electricity in the firm's market. If the firm is a monopoly and produces 36 billion kilowatt hours of electricity per year, then its average total cost of production will be $ 0.16 per kilowatt hour. (Enter a numeric response using a real number rounded to two decimal places.) Now suppose instead that two firms are in the market, each producing half of the market's electricity. If each firm has the same average total cost curve, then the average cost of producing electricity will now be $0.08 per kilowatt hour. (...) Price and cost (dollars per kilowatt hour) 0.52- 0.48- 0.44- 0.4- 0.36- 0.32- 0.28- 0.24- 0.24 0.16- 0.12- 0.08- 0.04- 0+ D. 8 12 16 20 24 28 32 36 40 4 Quantity of kilowatt hours (in billions)

The figure to the right shows the average total cost curve for a firm producing electricity and the total demand for electricity in the firm's market. If the firm is a monopoly and produces 36 billion kilowatt hours of electricity per year, then its average total cost of production will be $ 0.16 per kilowatt hour. (Enter a numeric response using a real number rounded to two decimal places.) Now suppose instead that two firms are in the market, each producing half of the market's electricity. If each firm has the same average total cost curve, then the average cost of producing electricity will now be $0.08 per kilowatt hour. (...) Price and cost (dollars per kilowatt hour) 0.52- 0.48- 0.44- 0.4- 0.36- 0.32- 0.28- 0.24- 0.24 0.16- 0.12- 0.08- 0.04- 0+ D. 8 12 16 20 24 28 32 36 40 4 Quantity of kilowatt hours (in billions)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Monopolists, unlike competitive firms, have some market power. A monopolist can increase price, within limits, without the quantity demanded falling to zero. The main way it retains its market power is through barriers to entry-that is, other companies cannot enter the market to create competition in that particular industry. Complete the following table by indicating which barrier to entry appropriately explains why a monopoly exists in each scenario. Barriers to Entry Economies of Scale Scenario In the natural gas industry, low average total costs are obtained only through large-scale production. In other words, the initial cost of setting up all the necessary pipes and hoses makes it risky and, most likely, unprofitable for competitors to enter the market. The Aluminum Company of America (Alcoa) formerly controlled all U.S. sources of bauxite, a key component in the production of aluminum. Given that Alcoa did not sell bauxite to any other companies, Alcoa was a monopolist in the…
In many countries, the government chooses to "internalize" the monopoly by owning monopoly providers of goods and services. (In some cases these firms are "nationalized" and the government actually buys or confiscates firms that operate in monopoly markets). Explain TWO advantages and TWO disadvantages of such an approach
Give step by step answer de student question Time Left : 01:58:56 Student question Assume that two companies (A and B) are duopolists who produce identical products. Demand for the products is given by the following linear demand function: P=400−QA−QB where QA and QB are the quantities sold by the respective firms and P is the selling price. Total cost functions for the two companies are TCA=1,500+110QA+QA2 TCB=1,200+40QB+2QB2 Assume that the firms form a cartel to act as a monopolist and maximize total industry profits (sum of Firm A and Firm B profits). In such a case, Company A will produce units and sell at $ . Similarly, Company B will produce units and sell at $ . At the optimum output levels, Company A earns total profits of $ and Company B earns total profits of $ . Therefore, the total industry profits are $ . At the optimum output levels, the marginal cost of Company A is $ and the marginal cost of Company B is $ . The following…
Describe two different fundamental ways that a firm can try to move towards being a monopoly
Can you help with parts d,e, and f please? Assume the following equations describe the conditions for a monopoly: Qd = 2,000 - 100P TC = 3,500 + 5q + .005q2 Where Qd is the quantity demanded, P is the commodity's price in dollars, TC is the firm's total cost in dollars and q is the quantity of output produced. Based upon these equations, answer the following questions:a. What is the firm's equation for total revenue expressed as a function of quantity? b. What is the firm's equation for marginal revenue expressed as a function of quantity? What is the firm's equation for marginal cost expressed as a function of quantity? c. What is the firm's profit maximizing quantity of output? d. What price will the firm charge for the commodity? e. What would be the socially optimal quantity of output? f. What price would regulators have to establish in order to have the firm produce the socially optimal quantity of output?
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