Use the below graph:If a regulatory commission establishes a price with the goal of allowing the firm a normal profit, what would be the price and output? What would be the firm’s profit or loss? ### Educational Website Content: Economics - Monopoly and Long-Run Costs#### Graph ExplanationThe graph provided illustrates the relationship between cost, revenue, and demand in a monopolistic market structure, specifically focusing on long-run average costs (LRAC) and long-run marginal costs (LRMC). #### Components of the Graph1. **Axes**: - The vertical axis represents "Dollars per unit," indicating the price or cost per unit of a product or service. - The horizontal axis represents "Quantity," indicating the amount of product or service produced or sold.2. **Demand Curve**: - The "Demand" curve is depicted by the downward-sloping blue line running from point 'a' to point 'z'. This curve shows the relationship between the price of the product and the quantity demanded by consumers.3. **Marginal Revenue (MR) Curve**: - The "MR" curve is represented by the red line that also slopes downward, but at a steeper rate compared to the demand curve. The MR curve lies below the demand curve, intersecting the vertical axis at a lower point.4. **Long-Run Average Cost (LRAC) Curve**: - The LRAC curve is shown as the black curved line, labeled from points 'i' to 'm'. This curve captures the average cost per unit of production when the firm is operating in the most efficient scale after all inputs are variable.5. **Long-Run Marginal Cost (LRMC) Curve**: - The LRMC curve is depicted by the orange red line labeled from points 'j' to 'n'. This curve represents the additional cost of producing one more unit of output in the long run.#### Key Points on the Graph- **Intersection Points**: - Point 'k' is where the MR curve (red) intersects the LRMC curve (orange red). - Point 'j' is where the LRMC curve intersects the LRAC curve. - Point 'm' is where the LRAC curve intersects the demand curve.- **Horizontal Lines**: - Several dotted horizontal lines are drawn at different price levels. For example: - Line 'eg' runs horizontally at price level 'g'. - Line 'bh' runs horizontally at price level 'h'. - These lines help in identifying the specific prices (in dollars per unit) corresponding to intercepts and intersections on the graph.#### Interpretation

A regulatory commission can maximize its profit where long-run marginal cost(LRMC) is equal to the…

Answered: Use the below graph: If a regulatory…

Use the below graph: If a regulatory commission establishes a price with the goal of allowing the firm a normal profit, what would be the price and output? What would be the firm’s profit or loss?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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12. You’ve been hired as a consultant by a monopoly. You discover that the demand curve facing the monopoly is given by P = 80-Q and MC = 3Q. The firm is currently charging a price of $60. Using this information and a carefully drawn and labeled diagram and assuming that the firm should remain open, explain what the firm should do and why.
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?
A monopoly, unlike a perfectly competitive firm, has some market power. Thus, it can raise its price, within limits, without quantity demanded falling to zero. The main way monopolies retain their market power is through barriers to entry, which prevent other companies from entering monopolized markets and competing for customers. Consider the market for taxi services. In order to own and operate a taxi, drivers are required to obtain a taxi medallion. Which of the following best explains the barriers to entry that exist in this scenario? Increasing returns to scale Control over an important input O Legal barriers
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Refer to the graph below: Price and cost (dollars) 0 $ MR MC ATC AVC D 20 40 60 80 100 120 140 160 Quantity The figure shows the demand and cost curves facing a monopoly in the short run. The profit-maximizing level of output is...
Henry Potter owns the only well in town that produces clean drinking water. He faces the following demand, marginal revenue, and marginal cost curves: 1 Demand: P=100-Q Marginal Revenue: MR 100-20 Marginal Cost: MC=10+Q On the following graph, use the blue line (circle symbol) to graph Mr. Potter's demand curve. Then, use the black line (cross symbol) to graph his marginal revenue (MR) curve. Next, use the orange line (square symbol) to graph his marginal cost (MC) curve. Finally, use the grey point (star symbol) to indicate the profit-maximizing price and quantity. Price (Dollars) 110 100 90 NO 70 60 50 30 -20 30 40 60 60 -70 -60 90 110 30 50 70 80 90 Quantity (Units) Demand MR MC * Profil-Maximization The profit-maximizing quantity is units, and the profit-maximizing price is $ (?) Mayor George Bailey, concerned about water consumers, is considering a price ceiling that is 10% below the monopoly price. At this new price, the quantity demanded would be units. At this quantity, the…
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#6. Your company sells widgets. There is only one other firm in the market: Bear Widgets. Demand for your product depends upon your price, your quantity, and the price that Bear Widgets charges (Pzear). You think that Bear Widgets will either charge $10 or $20. What should you do if their price will be $10? Demand: P = 50 – Q + 0.5Pgear Marginal costs: MC = 2Q a. Produce Q = 20 b. Produce Q = 18.33 c. Produce Q = 16.67 d. Produce Q = 15 e. Produce Q = 13.75
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