The reason for producing a socially undesirable output by monopoly industry.

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Answer 1

Question

Chapter 12, Problem 1DQ

To determine

The reason for producing a socially undesirable output by monopoly industry.

Expert Solution & Answer

Explanation of Solution

Monopoly is an imperfect market structure where there is only a single seller and more buyers. The monopolist controls the market prices and there are barriers in entry into the market and there are no substitute goods available in the market. The firm produces less output and increases the price without affecting all demands of the product. This may affect people badly. This market power leads the firm to earn long-run profit. The monopolist charges higher price than its marginal cost, which results in producing less than the optimal level of output.

Economics Concept Introduction

Monopoly: Monopoly is an imperfect market structure where there is only a single seller and more buyers. The monopolist controls the market prices and there are barriers in entry into the market and there are no substitute goods available in the market.

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Problem 3 You are given the following demand for European luxury automobiles: Q=1,000 P-0.5.2/1.6 where P-Price of European luxury cars PA = Price of American luxury cars P, Price of Japanese luxury cars I= Annual income of car buyers Assume that each of the coefficients is statistically significant (i.e., that they passed the t-test). On the basis of the information given, answer the following questions 1. Comment on the degree of substitutability between European and American luxury cars and between European and Japanese luxury cars. Explain some possible reasons for the results in the equation. 2. Comment on the coefficient for the income variable. Is this result what you would expect? Explain. 3. Comment on the coefficient of the European car price variable. Is that what you would expect? Explain.

Problem 2: A manufacturer of computer workstations gathered average monthly sales figures from its 56 branch offices and dealerships across the country and estimated the following demand for its product: Q=+15,000-2.80P+150A+0.3P+0.35Pm+0.2Pc (5,234) (1.29) (175) (0.12) (0.17) (0.13) R²=0.68 SER 786 F=21.25 The variables and their assumed values are P = Price of basic model = 7,000 Q==Quantity A = Advertising expenditures (in thousands) = 52 P = Average price of a personal computer = 4,000 P. Average price of a minicomputer = 15,000 Pe Average price of a leading competitor's workstation = 8,000 1. Compute the elasticities for each variable. On this basis, discuss the relative impact that each variable has on the demand. What implications do these results have for the firm's marketing and pricing policies? 2. Conduct a t-test for the statistical significance of each variable. In each case, state whether a one-tail or two-tail test is required. What difference, if any, does it make to…

Answer 2

Question

Chapter 12, Problem 1DQ

To determine

The reason for producing a socially undesirable output by monopoly industry.

Expert Solution & Answer

Explanation of Solution

Monopoly is an imperfect market structure where there is only a single seller and more buyers. The monopolist controls the market prices and there are barriers in entry into the market and there are no substitute goods available in the market. The firm produces less output and increases the price without affecting all demands of the product. This may affect people badly. This market power leads the firm to earn long-run profit. The monopolist charges higher price than its marginal cost, which results in producing less than the optimal level of output.

Economics Concept Introduction

Monopoly: Monopoly is an imperfect market structure where there is only a single seller and more buyers. The monopolist controls the market prices and there are barriers in entry into the market and there are no substitute goods available in the market.

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Answer 3

Question

Chapter 12, Problem 1DQ

To determine

The reason for producing a socially undesirable output by monopoly industry.

Expert Solution & Answer

Explanation of Solution

Monopoly is an imperfect market structure where there is only a single seller and more buyers. The monopolist controls the market prices and there are barriers in entry into the market and there are no substitute goods available in the market. The firm produces less output and increases the price without affecting all demands of the product. This may affect people badly. This market power leads the firm to earn long-run profit. The monopolist charges higher price than its marginal cost, which results in producing less than the optimal level of output.

Economics Concept Introduction

Monopoly: Monopoly is an imperfect market structure where there is only a single seller and more buyers. The monopolist controls the market prices and there are barriers in entry into the market and there are no substitute goods available in the market.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 12, Problem 1DQ

To determine

The reason for producing a socially undesirable output by monopoly industry.

Expert Solution & Answer

Explanation of Solution

Monopoly is an imperfect market structure where there is only a single seller and more buyers. The monopolist controls the market prices and there are barriers in entry into the market and there are no substitute goods available in the market. The firm produces less output and increases the price without affecting all demands of the product. This may affect people badly. This market power leads the firm to earn long-run profit. The monopolist charges higher price than its marginal cost, which results in producing less than the optimal level of output.

Economics Concept Introduction

Monopoly: Monopoly is an imperfect market structure where there is only a single seller and more buyers. The monopolist controls the market prices and there are barriers in entry into the market and there are no substitute goods available in the market.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 12, Problem 1DQ

To determine

The reason for producing a socially undesirable output by monopoly industry.

Expert Solution & Answer

Explanation of Solution

Monopoly is an imperfect market structure where there is only a single seller and more buyers. The monopolist controls the market prices and there are barriers in entry into the market and there are no substitute goods available in the market. The firm produces less output and increases the price without affecting all demands of the product. This may affect people badly. This market power leads the firm to earn long-run profit. The monopolist charges higher price than its marginal cost, which results in producing less than the optimal level of output.

Economics Concept Introduction

Monopoly: Monopoly is an imperfect market structure where there is only a single seller and more buyers. The monopolist controls the market prices and there are barriers in entry into the market and there are no substitute goods available in the market.

Answer 6

Chapter 12, Problem 1DQ

To determine

The reason for producing a socially undesirable output by monopoly industry.

Expert Solution & Answer

Explanation of Solution

Monopoly is an imperfect market structure where there is only a single seller and more buyers. The monopolist controls the market prices and there are barriers in entry into the market and there are no substitute goods available in the market. The firm produces less output and increases the price without affecting all demands of the product. This may affect people badly. This market power leads the firm to earn long-run profit. The monopolist charges higher price than its marginal cost, which results in producing less than the optimal level of output.

Economics Concept Introduction

Monopoly: Monopoly is an imperfect market structure where there is only a single seller and more buyers. The monopolist controls the market prices and there are barriers in entry into the market and there are no substitute goods available in the market.

Answer 7

Chapter 12, Problem 1DQ

To determine

The reason for producing a socially undesirable output by monopoly industry.

Answer 8

Expert Solution & Answer

Explanation of Solution

Monopoly is an imperfect market structure where there is only a single seller and more buyers. The monopolist controls the market prices and there are barriers in entry into the market and there are no substitute goods available in the market. The firm produces less output and increases the price without affecting all demands of the product. This may affect people badly. This market power leads the firm to earn long-run profit. The monopolist charges higher price than its marginal cost, which results in producing less than the optimal level of output.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Monopoly: Monopoly is an imperfect market structure where there is only a single seller and more buyers. The monopolist controls the market prices and there are barriers in entry into the market and there are no substitute goods available in the market.

Answer 12

Ch. 12 - Prob. 1DQ Ch. 12 - Prob. 2DQ Ch. 12 - Prob. 3DQ Ch. 12 - Prob. 4DQ Ch. 12 - Prob. 5DQ Ch. 12 - Prob. 6DQ Ch. 12 - Prob. 7DQ Ch. 12 - Prob. 8DQ Ch. 12 - Prob. 1TY Ch. 12 - Prob. 2TY

The reason for producing a socially undesirable output by monopoly industry.

The reason for producing a socially undesirable output by monopoly industry.

Explanation of Solution

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