The following graph shows the demand, marginal revenue, and marginal cost curves for a single-price monopolist that produces a drug that helpsreleve arthritis pain.Place the grey point (star symbol) in the appropriate location on the graph to Indicate the monopoly outcome such that the dashed lines reveal theprofit-maximizing price and quantity of a single-price monopolst. Then, use the green rectangle (triangle symbols) to show the profits earned by themonopolist.10Manapaly OutcomeManapaly Profits4MC = ATC1.MRDamand3 4QUANTITY (Millians of dasas par yaar)56101268Suppose that should the patent on this particular drug explre, the market would become perfectly competitive, with new firms Immedlately enterlingthe market with essentially Identical products.Further suppose that In this case the original firm will hire lobbylsts and make donations to several key politicians to extend Its patent for one moreyear. The firm Is prepared to spend up to $million to extend Its patent.PRICE (Dallars par dase)

We are going to compare the profit maximizing conditions in presence of monopoly and perfect…

The following graph shows the demand, marginal revenue, and marginal cost curves for a single-price monopolist that produces a drug that helps relleve arthritis pain. Place the grey point (star symbol) in the appropriate location on the graph to Indicate the monopoly outcome such that the dashed lines reveal the profit-maximizing price and quantity of a single-price monopolist. Then, use the green rectangle (triangle symbols) to show the profits earned by the monopolist. 10 Maxpoly Outcome Manapaly Profits 4. MC= ATC MR Damand 2 3 4 QUANTITY (Millias of dases par yar) 5 10 Suppose that should the patent on this particular drug expire, the market would become perfectly competitive, with new firms Immediately entering the market with essentially identical products. Further suppose that in this case the original firm will hire lobbyists and make donations to several key politicians to extend its patent for one more year. The firm is prepared to spend up tos million to extend its patent. PRICE (Dallars par dose)

The following graph shows the demand, marginal revenue, and marginal cost curves for a single-price monopolist that produces a drug that helps relleve arthritis pain. Place the grey point (star symbol) in the appropriate location on the graph to Indicate the monopoly outcome such that the dashed lines reveal the profit-maximizing price and quantity of a single-price monopolist. Then, use the green rectangle (triangle symbols) to show the profits earned by the monopolist. 10 Maxpoly Outcome Manapaly Profits 4. MC= ATC MR Damand 2 3 4 QUANTITY (Millias of dases par yar) 5 10 Suppose that should the patent on this particular drug expire, the market would become perfectly competitive, with new firms Immediately entering the market with essentially identical products. Further suppose that in this case the original firm will hire lobbyists and make donations to several key politicians to extend its patent for one more year. The firm is prepared to spend up tos million to extend its patent. PRICE (Dallars par dose)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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George has a monopoly on burrito sales in a small town in Kansas. The burritos cost him a constant $5 each to produce. He faces following demand schedule for his product: Price Quantity Demanded $30 0 $25 1 $20 2 $15 3 $10 4 $5 5 $0 6 Under normal monopoly conditions, how many burritos should he produce, what price should he charge, and how much profit can he expect to make? Draw a graph under these assumptions showing (and calculating) producer surplus, consumer surplus, economic surplus, and deadweight loss. If George could engage in perfect price discrimination, how many burritos would he produce, what would his total revenue be, and how much profit would he earn? Draw a graph under these assumptions showing (and calculating) producer surplus, consumer surplus, economic surplus, and deadweight loss. Is society better off by allowing George to perfectly price discriminate? Defend your answer.
Please solve for ( b).
Scenario 15-2 A monopoly firm maximizes its profit by producing 500 units output (so Q = 500). At that level of output, its marginal revenue is $32, its average revenue is $42, and its average total cost is $36. Refer to Scenario 15-2. At Q = 500, what is the firm's marginal cost? $36 $32 less than $32 greater than $36
Use the following graph of a monopoly market to answer this question: P $13 $10 150 300 Which of the following statements is an accurate interpretation of the graph? This firm engages in perfect price discrimination; 150 of its customers are willing to pay exactly $13, and 150 are willing to pay exactly $10. This firm price-discriminates by selling its product for $13 to the 150 consumers willing to pay at least $13, and selling it for $10 to the 150 consumers willing to pay between $10 and $13. This firm engages in price discrimination by negotiating on price with each of its customers. This firm price-discriminates by selling its product for $13 to the 150 consumers willing to pay at least $13, and selling it for $10 to the 300 consumers willing to pay between $10 and $13. This firm engages in perfect price discrimination; 150 of its customers are willing to pay exactly $13, and 300 are willing to pay exactly $10.
In the following table, enter the price and quantity that would arise in a competitive market; then enter the profit-maximizing price and quantity that would be chosen if a monopolist controlled this market. Market Structure Price Quantity (Dollars) (Hot dogs) Competitive Monopoly
In the linear example illustrated in the figure to the right, how does charging the monopoly a specific tax of t = $8 per unit affect the monopoly optimum and the welfare of consumers, the monopoly, and society (where society's welfare includes tax revenue)? What is the incidence of the tax on consumers? Determine how imposing the tax affects the monopoly optimum. Use the line drawing tool to show how the tax affects the monopoly's cost of production by drawing a new marginal cost curve with the tax. Label this line 'MC¹'. Carefully follow the instructions above, and only draw the required objects. p, $ per unit 26- 24- 22- 20- 18- 16- 14- 12- 10- 8- 6- 4- 2- 0- 0 2 3 4 MC D MR 5 6 7 8 9 10 11 12 13 Q, Units per day
To answer this question, you will want to work out the answer using a graph on a piece of scratch paper (not turned in). You are going to compare the outcomes in the case where there is perfect competition to the monopoly case. So, as an intermediate step, you will need to compute the equilibrium outcomes under competition and monopoly. Suppose that you have the following information about the demand for oil. Price ($/barrel) 80 70 60 50 40 30 20 10 Suppose that the marginal cost to produce a barrel of oil is $20. What is the deadweight loss if the oil market is a monopoly? Quantity demanded(# barrels) 5 6 7 8 9 10 11 12
Consider the electricity industry, in which there are very large fixed costs but also in which variable costs are directly proportional to total output so that the marginal cost of each unit produced is small and constant. a) Assuming that one firm has an electricity monopoly, draw a diagram that shows the price the monopolist charges and the quantity the monopolist sells at this price. Be sure to include marginal cost, average total cost, marginal revenue, and demand curves in your diagram. What happens if the electricity industry is perfectly competitive? More specifically, let us assume that the marginal cost curve from part (a) is equal to the perfectly competitive market supply curve. In this case, show in a diagram what the perfectly competitive equilibrium price and quantity in this industry are. What will happen to the number of firms producing electricity in the long run? What does this say about the desirability of monopoly vs. perfect competition in this industry?…
Question 2: Suppose a monopoly firm produces bicycles and can sell 10 bicycles per month at a price of $700 per bicycle. In order to increase sales by one bicycle per month, the monopolist must lower the price of its bicycles by $100 to $600 per bicycle. What is the marginal revenue of the eleventh bicycle?
Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and quantity for BYOB. If BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if BYOB is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing the loss. 4.00 3.50 Monopoly Outcome 3.00 2.50 Profit 2.00 АТC 1.50 Loss 1.00 0.50 MC MR 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 QUANTITY (Thousands of cans of beer) PRICE (Dollars per unit)
BYOB is a monopolist in beer production and distribution in the imaginary economy of Hopsville. Suppose that BYOB cannot price discriminate; that is, it sells its beer at the same price per can to all customers. The following graph shows the marginal cost (MC), marginal revenue (MR), average total cost (ATC), and demand (D) for beer in this market. Place the black point (plus symbol) on the graph to indicate the profit-maximizing price and quantity for BYOB. If BYOB is making a profit, use the green rectangle (triangle symbols) to shade in the area representing its profit. On the other hand, if BYOB is suffering a loss, use the purple rectangle (diamond symbols) to shade in the area representing its loss. Suppose that BYOB charges $2.50 per can. Your friend Charles says that since BYOB is a monopoly with market power, it should charge a higher price of $3.00 per can because this will increase BYOB’s profit. Complete the following table to determine whether Charles is…
d. Suppose the government imposes an average pricing rule, requiring the monopolist to set its price equal to the average total cost. Place the point labeled “Average cost pricing” at the appropriate coordinates to indicate the firm's price and quantity under this rule. Please place the Monoploy Pricing, Marginal Cost Pricing, and Average Cost Pricing on their appropriate places on the graph. Thank you!