Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
20th Edition
ISBN: 9780078021756
Author: McConnell, Campbell R.; Brue, Stanley L.; Flynn Dr., Sean Masaki
Publisher: McGraw-Hill Education
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Question
Chapter 12, Problem 1P
To determine
Profit maximizing price and output.
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Students have asked these similar questions
1. At what output rate and price does the monopolist operate?
2. In equilibrium, approximately what is the firm’s total cost and total revenue?
3. What is the firm’s economic profit or loss in equilibrium?
The figure on the right shows the demand schedule for a product produced by a
single-price monopolist.
Price ($)
9
8
0000
7
6
5
4
3
C. 5th unit
Quantity
demanded
What is the lowest level of output at which marginal revenue becomes negative?
OA. 6th unit
OB. 9th unit
D. 7th unit
OE. 8th unit
5
6
7
8
9
10
11
Price ($)
141
222 =26=LO
13-
12-
11-
10-
9-
8-
4-
2-
1-
45 6 7 8 9 10 11 12 13 14 15 16
Quantity
E
The table presents the demand schedule and marginal costs facing a monopolist producer.
Fill in the total revenue and marginal revenue columns.
What is the profit-maximizing level of output?
What price will the monopolist charge for the quantity in part b?
Chapter 12 Solutions
Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
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Similar questions
- Suppose that a monopolist faces linear demand given by Q(p)=90-3"p The monopolist also pays a marginal cost of $2 for each unit produced. What is the price that the monopolist will set to maximize its profits? O 16.5 O 15 O 16 O 15.5arrow_forward10. Is the demand for a life-saving drug like Daraprim (Front Page Economics "Drugmaker Hikes Price of AIDS Drug 5,000 Percent!") likely to be elastic or inelastic? How does that affect the pricing decision of a monopolist? LO10-1 IT quarrow_forwardUnsure of what I have so far is correct and unsure how to solve the restarrow_forward
- The following diagram depicts the operating conditions for a profit-maximising monopolist. Calculate the deadweight loss created by this monopoly selling at the profit maximising point. Price ($) MC 10 Demand MR 5 7.5 10 Quantity (a) $4.25 (b) $6.25 (c) $8.25 (d) None of the above. 20 15 LO 20 15arrow_forwardA local magic shop has a monopoly on the production of magic wands. Each customer wants only one magic wand, and the table below shows each customer's willingness to pay. The marginal cost of producing a wand is $21 no matter how many are produced. Quantity demanded Price per wand ($) LO 01 2 3 4 5 6 78 30 27 24 21 18 15 12 96 If the shop can charge only a single price, it will charge $ wands. If the firm practices perfect price discrimination, it will sell a total of earn a profit of $| and sell wands andarrow_forwardwhat is the efficiency (or deadweight) loss due to monopoly control of the industry?arrow_forward
- Give typing answer with explanation and conclusionarrow_forwardFigure #2: MC 7 AC D MR Quantity (Q) 100 125 150 175 200 In Figure#2, the profit-maximizing condition of a monopolist is to produce following units of output and to charge the following price respectively: 58660S43 21 Pricearrow_forwardThe accompanying diagram shows demand, marginal revenue, and marginal cost of a monopolist. $120 MC 110 100 90 80 70 60 50 40 30 20 10 MR 0+ Quantity o i 2 3 4 s6i s 9 10 11 12 13 14 is a) Determine the profit-maximizing output and price. b) What price and output would prevail if this firm's product was sold by price-taking firms in a perfectly competitive market? c) Calculate the deadweight loss of this monopoly. d) Suppose MC increases. How would this affect monopoly price and quantity? e) Suppose market demand became less price elastic (hint: became flatter). How does this affect monopoly price and quantity?arrow_forward
- 6. The total cost curve for firms in a natural monopoly is estimated to be: TC = 2Q3 – 100Q² + 10000Q The government has a desired industry output of 100. What is the minimum efficient scale in this industry? O 5% O 10% O 12.5% O 25% O 50%arrow_forwardA monopolist has constant marginal cost equal to 30 and faces a market demand curve given by the following p= 100-2Q. If the monopolist is a perfect price discriminating monopolist its level of profit will be equal to (assume there is no fixed cost): O 1225. O 2450. O2275. O 1150. auto.proctoru.com is sharing your screen. Stop sharing Hide Next • Previous UN 18 SAParrow_forwardScenario 1: Barbara is a producer in a monopoly industry. Her demand curve, total revenue curve, marginal revenue curve, and total cost curve are given as follows: Q = 160 - 4P TR = 40Q- 0.25Q? MR = 40 - 0.5Q TC = 4Q MC = 4 Refer to Scenario 1. How much output will Barbara produce? O A. 56 O B. 22 O C. 72 O D. 0 E. None of the abovearrow_forward
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