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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Chapter 12, Problem 7DQ
To determine
Re importation of drugs to USA.
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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-
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45 6 7 8 9 10 11 12 13 14 15 16
Quantity
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A 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 $|
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2. Suppose a pure monopolist faces the following demand schedule and the same cost data as the competitive producer discussed in
problem 4 at the end of Chapter 10. Calculate the missing TR and MR amounts, and determine the profit-maximizing price and
profit-maximizing output for this monopolist. What is the monopolist's profit? Verify your answer graphically and by comparing total
revenue and total cost. LO11.4
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Total Cost
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1
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$45.00
$105.00
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40.00
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30
4
15.00
37.50
52.50
35
5
12.00
37.00
49.00
40
6
10.00
37.50
47.50
45
7
8.57
38.57
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7.50
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9
6.67
43.33
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10
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46.50
52.50
Price Quantity Demanded Total Revenue Marginal Revenue
$115
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42
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2 % 522332
100
0
1
2
3
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9
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Chapter 12 Solutions
Economics: Principles, Problems, & Policies (McGraw-Hill Series in Economics) - Standalone book
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Similar questions
- The following diagram depicts the operating conditions for a profit-maximising monopolist. Calculate the deadweight loss created by this monopoly selling at the profit maximising point. Price ($) MC 10 Demand MR 5 7.5 10 Quantity (a) $4.25 (b) $6.25 (c) $8.25 (d) None of the above. 20 15 LO 20 15arrow_forward(Figure: Pharmaceutical Pills Sales I) A pharmaceutical company sells its pills in foreign and domestic markets. Domestic Market Foreign Market Price ($) 20 Price ($) 20 18 18 16 16 14 14 12 12 10 10 8 8 6 6 MC MC 4 4 2 MR 2 D MR D 0 0 2 4 6 8 10 12 2 4 6 8 10 12 Quantity Quantity Suppose the company must charge the same price in each market. The profit-maximizing price is $ ○ 12 ○ 8.67 7.67 ○ 7.00arrow_forwardA company wants to issue a coupon for a product. The marginal cost of the product is $1. If the elasticity of demand for coupon users is -5 and the elasticity of demand for non-coupon users is -2, then in order to maximize profit, what should the value of the coupon (in dollars) be? O 0.50 O 0.75 O 1.00 O 1.50arrow_forward
- The figure below shows the total cost and total revenue curves for a monopolist. The profit - maximizing output for the monopolist is 1 unit 2 units 3 units 4 units 5 units The figure below shows the total cost and total revenue curves for a monopolist. The profit-maximizing output for the monopolist is $100 90 80 70 60 50 40 30 20 10 1 unit 0 1 2 3 4 5 6 7 8 9 2 units 3 units O4 units. TR 5 units Q/tarrow_forward1. The table below represents the demand for Widgets, Inc., which has a monopoly in the sale of widgets. Calculate total revenue and marginal revenue for the levels of output given. Draw the demand curve and the marginal revenue curve in a same graph. Quantity 0 1 2 3 4 LO 5 Price $25 21 17 13 9 LO 5arrow_forwardNote:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forward
- 9a and 9b?arrow_forwardurgent Question 3.Assume that a Swiss drug company holds the patent on a malaria medicine that has no closesubstitutes. If it charges the same price in every country where it sells this medicine, a price thatwill maximize its profits, that price will exceed what the vast majority of consumers in twentylower-income countries can afford to pay.a) Illustrate this situation using supply and demand curves.b) Use supply and demand curves to show how the Swiss company can sell at different prices ineach country and make a profit in each. Identify on the curves the profit the Swiss companymakes in a typical poorer country, and the profit it makes in a wealthier country.c) What condition is necessary for the Swiss company to be able to follow this strategy?arrow_forwardUnsure of what I have so far is correct and unsure how to solve the restarrow_forward
- 1arrow_forwardА. What is the reason for a monopolist to practice price discrimination? Describe one form of price discrimination in which a monopolist produces the same output as a perfect competitive industry. Explain clearly why the monopolist does so instead of producing the same output as a single-price monopoly. В. С. Movie theaters charge a lower price for morning shows and a higher price for evening shows. With a clearly labeled figure, show and explain the form of price discrimination practiced by movie theaters.arrow_forward4arrow_forward
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