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*Use the graph to answer Questions Q7 through Q18. The graph represents the market situation that a monopolist faces. Use the graph to answer the following questions. $100 $90 MC S80 $70 $60 $50 $40 $30 $20 S10 MR So 10 15 20 Output Quantity Q7 What quantity will the monopolist produce? a) 0 b) 6 c) 9 d) 10 Q8 What price will the monopolist charge? a) $100 b) $70 c) $55 d) $40 Q9 What is the producer surplus (i.e. monopolist's profit)? Hint: The area of polygon below price and above supply, up until q*. a) $202.5 b) $270 c) $90 d) $45 Q10 What is the consumer surplus? Hint: Area of triangle below demand and above price, up until q*. a) $202.5 b) $270 G) $90

*Use the graph to answer Questions Q7 through Q18. The graph represents the market situation that a monopolist faces. Use the graph to answer the following questions. $100 $90 MC S80 $70 $60 $50 $40 $30 $20 S10 MR So 10 15 20 Output Quantity Q7 What quantity will the monopolist produce? a) 0 b) 6 c) 9 d) 10 Q8 What price will the monopolist charge? a) $100 b) $70 c) $55 d) $40 Q9 What is the producer surplus (i.e. monopolist's profit)? Hint: The area of polygon below price and above supply, up until q*. a) $202.5 b) $270 c) $90 d) $45 Q10 What is the consumer surplus? Hint: Area of triangle below demand and above price, up until q*. a) $202.5 b) $270 G) $90

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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*Use the graph to answer Questions Q7 through Q18. The graph represents the market situation that a monopolist faces. Use the graph to answer the following questions. $100 $90 MC 580 $70 $60 50 $40 $30 520 S10 MR So 10 15 20 Output Quantity Q7 What quantity will the monopolist produce? a) o b) 6 c) 9 d) 10 Q8 What price will the monopolist charge? a) $100 b) $70 c) $55 d) $40 Q9 What is the producer surplus (i.e. monopolist's profit)? Hint: The area of polygon below price and above supply, up until q*. a) $202.5 b) $270 c) $90 d) $45 Q10 What is the consumer surplus? Hint: Area of triangle below demand and above price, up until q*. a) $202.5 b) $270 c) $90 d) $45 Q11 What is the deadweight loss? a) $202.5 b) $270 c) $90 d) $45
Transcribed Image Text:*Use the graph to answer Questions Q7 through Q18. The graph represents the market situation that a monopolist faces. Use the graph to answer the following questions. $100 $90 MC 580 $70 $60 50 $40 $30 520 S10 MR So 10 15 20 Output Quantity Q7 What quantity will the monopolist produce? a) o b) 6 c) 9 d) 10 Q8 What price will the monopolist charge? a) $100 b) $70 c) $55 d) $40 Q9 What is the producer surplus (i.e. monopolist's profit)? Hint: The area of polygon below price and above supply, up until q*. a) $202.5 b) $270 c) $90 d) $45 Q10 What is the consumer surplus? Hint: Area of triangle below demand and above price, up until q*. a) $202.5 b) $270 c) $90 d) $45 Q11 What is the deadweight loss? a) $202.5 b) $270 c) $90 d) $45
$100 S90 $80 MC S70 560 $50 S40 S30 $20 $10 MR so 15 20 10 Output Quantity *** Suppose that the monopolist is replaced with many firms, and this market becomes purely competitive. The marginal cost and demand curves remain the same. *** Q12 What is the new market quantity (under pure competition)? a) 0 b) 6 c) 9 d) 10 Q13 What is the new market price (under pure competition)? a) $100 b) $70 c) $55 d) $40 Q14 What is the new producer surplus (under pure competition)? a) $202.5 b) $270 c) $90 d) $45 Q15 What is the new consumer surplus (under pure competition)? a) $202.5 b) $270 c) $90 d) $45 Q16 Refer to your answers to Questions Q10 and Q15. Compared to pure competition, consumers face a(n) consumer surplus with a monopoly. a) lower b) higher c) unchanged
Transcribed Image Text:$100 S90 $80 MC S70 560 $50 S40 S30 $20 $10 MR so 15 20 10 Output Quantity *** Suppose that the monopolist is replaced with many firms, and this market becomes purely competitive. The marginal cost and demand curves remain the same. *** Q12 What is the new market quantity (under pure competition)? a) 0 b) 6 c) 9 d) 10 Q13 What is the new market price (under pure competition)? a) $100 b) $70 c) $55 d) $40 Q14 What is the new producer surplus (under pure competition)? a) $202.5 b) $270 c) $90 d) $45 Q15 What is the new consumer surplus (under pure competition)? a) $202.5 b) $270 c) $90 d) $45 Q16 Refer to your answers to Questions Q10 and Q15. Compared to pure competition, consumers face a(n) consumer surplus with a monopoly. a) lower b) higher c) unchanged
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