The monopoly and price elasticity of a demand.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

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!

Students have asked these similar questions

Consider the simple discrete job search model that we studied in class. Only the unemployed can receive one offer per period from F(w) that is a uniform distribution on [0,2]. There is a constant probability of being laid off at the end of each period while employed. Assume that she can get a new offer right away when laid off. We want to understand the reservation wage, WR, in this model. Assume that u(c) = c. The parameters are a discount factor ẞ and an unemployment benefit b.R and show that T is contraction on [0, ∞). Explicitly state any additional assumptions that you may need.(Grading guide line: 5pt for the exact form of T, 10pt for showing contraction, and 5pt for stating correct assumptions.)< (b) Discuss why (a) is useful to understand the reservation wage wд in this economy.< (c) We write WR = WR (b,ẞ,λ) to reveal its dependence on (b,ẞ,λ). Show that 0 ≤ aWR дь OWR дл ≤1 and ≥0. What about ? awR ав State any additional assumptions that you may need.< (d) Briefly explain the…

3. Consider the market for paper. The process of producing paper creates pollution. Assume that the marginal damage function for pollution is given by: MDF = 3E where damages are measured in dollars and E is the level of emissions. Assume further that the function describing the marginal abatement cost of emissions is given by MAC 120-E where benefits are measured in dollars and E is the level of emissions. a. Graph the marginal damage function (MDF) and the marginal abatement cost function (MAC). b. What is the unregulated level of emissions Eu? What is the social welfare of this emissions level? c. Assume an existing emission quota limits emissions to E = 60. Show on the graph why this policy is inefficient. What is the deadweight loss caused by this policy?

show written calculation for B

Answer 2

Question

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

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 3

Question

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

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 monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

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 monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

Answer 6

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

Answer 7

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Answer 8

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

Answer 12

Ch. 12.4 - The MR curve lies below the demand curve in this...Ch. 12.4 - Prob. 2QQ Ch. 12.4 - Prob. 3QQ Ch. 12.4 - Prob. 4QQ Ch. 12 - Prob. 1DQ Ch. 12 - Prob. 2DQ Ch. 12 - Prob. 3DQ Ch. 12 - Prob. 4DQ Ch. 12 - Prob. 5DQ Ch. 12 - Prob. 6DQ

The monopoly and price elasticity of a demand.

The monopoly and price elasticity of a demand.

Explanation of Solution

Want to see more full solutions like this?

Chapter 12 Solutions