Chapter13: Monopoly And Antitrust
Section: Chapter Questions
Problem 9P
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Question
1. Using a graph, show a situation in which a monopolist is incurring short-run losses. Explain how this is possible.
2. Julee has estimated the demand and marginal revenue for her product. They are P = 100 - 2Q (quantity) and MR = 100 - 4Q, respectively. She also experiences constant marginal cost of $16.
a. Does Julee have any market power? How can you tell?
b. What is Julee’s profit-maximizing quantity?
c. What price should Julee charge at that profit-maximizing quantity?
3. Explain a situation in which, when holding costs constant, a monopolist that was earning economic profits in the past can later incur an economic loss.
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