There are 1000 competitive firms of the size represented by AC1, and AC2 represents the only firm if there were a monopoly. In the figure below, how much less does an unregulated monopoly produce compared to a perfectly competitive industry?

There are 1000 competitive firms of the size represented by AC1, and AC2 represents the only firm if there were a monopoly. In the figure below, how much less does an unregulated monopoly produce compared to a perfectly competitive industry?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Concept explainers

Perfect Competition

It is the structure of the market that is said to exist when with many buyers and sellers exchanging similar commodities and its price is fixed by the market forces, demand, and supply, and a single firm cannot cause an impact over the price or market value of the homogenous product. This structure of the market is called perfect competition.

Question

There are 1000 competitive firms of the size
represented by AC1, and AC2 represents the
only firm if there were a monopoly. In the
figure below, how much less does an
unregulated monopoly produce compared to
a perfectly competitive industry?
Price
$70
$60
$50
$40
A
B
C
D
Same
20b fewer units
30b fewer units
40b fewer units
X 50b fewer units
MC, AC,
Qi-50m
MC,
AC
AC
-MC
Quantity
Price
MR
Your answer
MC
JAC
D
30b 40b 50b 60b Quantity

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