What is a natural monopoly? O A monopoly that faces a high fixed cost and low marginal costs so that the average total cost curve slopes downward. A market in which there is only one firm. O A monopoly resulting from one firm's exclusive ownership of a natural resource required to produce a good. O A monopoly that results from government issuing patents. Which of the firms is most likely to be a natural monopoly? O A firm that owns nearly all of the diamond mines in the world. O A restaurant that is unable to practice price discrimination and must charge all consumers the same price. O Municipal Power Light, the local supplier of electricity. O A pharmaceutical company that has the exclusive right to sell a patented drug.

What is a natural monopoly? O A monopoly that faces a high fixed cost and low marginal costs so that the average total cost curve slopes downward. A market in which there is only one firm. O A monopoly resulting from one firm's exclusive ownership of a natural resource required to produce a good. O A monopoly that results from government issuing patents. Which of the firms is most likely to be a natural monopoly? O A firm that owns nearly all of the diamond mines in the world. O A restaurant that is unable to practice price discrimination and must charge all consumers the same price. O Municipal Power Light, the local supplier of electricity. O A pharmaceutical company that has the exclusive right to sell a patented drug.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Intel and Advanced Micro Devices make most of the chips that power a PC. What makes the market for PC chips a duopoly? The PC chip market is a duopoly if O A. at the efficient scale, two firms can satisfy the market demand OB. each firm can divide its consumers into two categories-business consumers and household consumers O C. the two firms can charge different prices for the same quality of PC chip O D. the market produces two goods Assume that Intel and Advanced Micro Devices have identical costs. The graph shows the market demand curve. Draw the average total cost curve of one firm if the chip market produces 800 chips an hour and other firms are prevented from entering. Label the curve. Draw a point on the average total cost curve at the efficient scale. 110- 100- 90- 80+ 70- 60+ 50- 40- 30- 20+ 10- 0- Price (dollars per chip) 0 $800 200 400 800 600 Quantity (chips per hour) >>> Draw only the objects specified in the question. D 1000 Q Q 1200
5- Use the figure below to answer the following questions. Price (dollars per unit) 100 80 60 40 20 O 20 MC MR 40 D 60 80 Quantity (units per week) Figure 3 a) Refer to Figure 3. If this market is perfectly competitive, the output level exceeds the single-price monopoly output level by how much? b) Refer to Figure 3. What is the allocative efficient quantity? c) Refer to Figure 3. If this market is a single-price monopoly, then what statement can be made about economic efficiency? Please explain your answer.
Monopoly ceases if the demand for the good is Little flexibility. O O not flexible. Flexibility equivalent. O flexible.
In the Cournot model the final level of output is the output that would be produced if the industry was a monopoly, and is the output that would be produced if the industry was perfectly competitive. O a. greater than; less than O b. greater than; equal to Oc. equal to; less than O d. less than; greater than In the Cournot model, when a new firm begins production it assumes its demand curve is O a. the market demand less the amount the other firm is selling. O b. the market demand plus the amount the other firm is selling. Oc. the same as the competing firm's demand curve. O d. one-half of the competing firm's demand curve.
QUESTION 11 Suppose that a pure monopolist can sell 5 units of output at $4 per unit and 6 units at $3.90 per unit. The monopolist will produce and sell the sixth unit if its marginal cost is: O A. S4 or less O B. S3.90 or less O C. $3.50 or less D. S3.40 or less
Price and cost (dollars per unit) 50.00 40.00 S=MC 30.00 20.00- 10.00. MR D. 100 200 300 400 500 Quantity (units per hour) In the above figure, a monopoly should charge $ for its output when maximizing profit. O $10 $20 $30 $40 O $50
A monopoly firm's total cost is: TC(Q) = Q° + 15Q + 225. if the industry's demand curve is described by P= 195 - 4Q. How much profit will this firm make if it is applying the profit maximizing rule? (Hint: MC = 20 + 15) O a$ 2025 O b.$ 1575 Oc.$ 279 O d. $ 3775 O e.$ 506
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While firms in perfect competition maximize profit by producing at a quantity where the marginal cost of producing another unit of a good is equal the the marginal revenue from producing another unit, monopoly firms will maximize profit by producing at a quantity where marginal cost of producing another unit is equal to the marginal revenue (the same as perfect competition) the marginal profit the average total cost O the price of the good 10:04 P Bi 63°F Cloudy 5/20/202 e here to search O
The figure to the right illustrates market demand for a monopoly along with its average total cost (ATC) curve. Is the monopoly a natural monopoly? The firm O A. is a natural monopoly because its demand curve is downward sloping. O B. is a natural monopoly because it has the potential to earn economic profits. OC. is not a natural monopoly because its demand curve is not infinitely elastic. O D. is not a natural monopoly because it experiences diseconomies of scale. OE E. is a natural monopoly because it can supply the entire market at lower average total cost than can two or more firms. Suppose 14 units of output are supplied in the market. How much lower is the average total cost of production for one firm compared to two firms? One firm can supply 14 units of output for $less per unit in average total cost than two firms. (Enter your response as an integer.) Price and cost (dollars per unit) 10.00- 9.00- 8.00- 7.00- 6.00- 5.00- 4.00- 3.00- 2.00- 1.00- 0.00- 0 2 4 6 ATC Demand 8 10…
When a monopolist spends money to make it harder for competitors to enter the industry, this is referred to as O deadweight loss. innovation protection. O x-inefficiency. rent seeking.
Which of the following statements regarding a profit-maximising monopolist is FALSE? O a. This firm might respond to a fall in demand by reducing both its output and its price. O b. This firm might respond to a fall in demand by reducing its output and increasing its price. O c. This firm would respond to a fall in the price of a variable input by increasing its output and reducing its price. d. This firm would respond to a fall in the price of a fixed input by increasing its output and reducing its price.