Essentials of Economics (MindTap Course List)
8th Edition
ISBN: 9781337091992
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Chapter 11, Problem 5CQQ
To determine
Characteristic of a public good.
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Compared to the social optimum, a monopoly firm chooses a. a quantity that is too low and a price that is too high. b. a quantity that is too high and a price that is too low. c. a quantity and a price that are both too high. d. a quantity and a price that are both too low.
The deadweight loss in a monopoly occurs because:
A. The monopolist produces less than the socially optimal output level.B. There is perfect competition in the market.C. The monopolist is forced to produce at a loss due to government intervention.D. Consumer surplus is maximized at the monopoly price.
Explain in brief.
a) Why government should intervention in a monopoly market.
b) Give a practical example of government intervention in the monopoly market.
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Essentials of Economics (MindTap Course List)
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- Please submit the answer and then watch the video feedback.Farmer Ted sells 1,000 bushels of wheat at a price of $5 per bushel in a competitive market. Wilma sells 5 gallons of water at a price of $5 per gallon in a monopoly market. If both Farmer Ted and Wilma want to sell a higher quantity, what happens to their respective prices? a.Farmer Ted's price remains constant and Wilma's price decreases. b.Farmer Ted's price decreases and Wilma's price remains constant. c.Farmer Ted's price remains constant and Wilma's price increases. d.Both Farmer Ted's and Wilma's prices decrease.arrow_forwarda. On a graph, show the quantity of beehives that the beekeeper will choose if there are barriers to negotiation with the orchardist and show how subsidizing beehives can lead to the efficient quantity. b. On another graph show how subsidizing honey can lead to the efficient quantity.arrow_forwardWhen governments deregulate an industry, using economic theory, explain what governments want to achieve in terms of social-well being.arrow_forward
- Each of these are possible benefits from a monopoly EXCEPT A. the ability to minimize deadweight loss from production. B. potential economies of scale from production. C. more jobs in research and development. D. new innovations in technology and in the creative arts.arrow_forwardA market structure that is “monopoly” is NOT ... Group of answer choices a. production efficient b. allocation efficient c. neither allocation nor production efficientarrow_forwardIs a monopoly always bad for society? a. No. For example, patents on medications create monopolies, and increase the price and reduce the quantity sold, but without them, no one would take the high costs of developing new drugs and the quantity will be... zero! b.Monopoly is not bad if its owner gives back to society in charity. c.Yes, Monopoly is always bad d. None of the other answers is correctarrow_forward
- Which of the following describes the type of entry barrier faced for taxicabs? A. There is a natural entry barrier for taxicabs because entry into the market has been limited through price cutting B. There is a natural entry barrier for taxicabs because entry into the market has been limited through quotas. C. There is a created entry barrier for taxicabs because entry into the market has been Ilimited through quotas. D. There is a created entry barrier for taxicabs because entry into the market has been limited through limited access to key natural resources.arrow_forwardHow would you describe the development of the market regulation and the concept of "fair competition" in the market?arrow_forwardPatents give entrepreneurs a __on their ideas. * a. price floor. b. price ceiling. c. negative externality. d. positive externality. e. monopoly. True or false: Patents have costs and benefits when it comes to encouraging idea creation and adoption. * a. True. b. False.arrow_forward
- Which of the following describes the type of entry barrier faced for hotels? A. There is a natural entry barrier for taxicabs because entry into the market has been limited through quotas. B. There is a natural entry barrier for hotels because entry into the market has been limited by the economies of scale. C. There is a created entry barrier for hotels because entry into the market has been limited by the economies of scale. D. There is a created entry barrier for hotels because entry into the market has been limited through limited access to key natural resources.arrow_forwardAndrew is a monopolist whose production process exhibits economies of scale. (a) Draw a diagram illustrating Andrew's profit-maximizing price and quantity. On your diagram, identify the deadweight loss of monopoly. (b) The government is concerned that Andrew is charging too high a price and plans to regulate the price. Hustrate the price regulation you would recommend on your diagram and explain your recommendation. (c) What is the maximum amount of money Andrew would be willing to spend lob- bying the government to avoid the price regulation you identified in (b)? 2.arrow_forwardHow do monopolies play into the treadmill of production and consumption on a larger scale?arrow_forward
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