Microeconomics
13th Edition
ISBN: 9781337617406
Author: Roger A. Arnold
Publisher: Cengage Learning
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Question
Chapter 12, Problem 7QP
To determine
Explain the reason why profit regulation leads to increase the cost of the regulated firms.
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How do you explain the competitive advantage of Publix?
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MR,
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Demand
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Quantity
a) Identify the quantity of output the monopoly wishes to supply and the price it will charge.
b) Suppose demand for the monopoly's product increases dramatically shifting it to the right.
Using the new demand curve determine what happens to the marginal revenue as a result of the
increase in demand? Assuming that the marginal cost curve stays the same. how will the new
profit-maximizing quantity and price change?
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- Why does monopoly need to be regulated?arrow_forwardSelect one or two examples of an industry characterized by monopoly and discuss how each example conforms to the definition of a monopoly?arrow_forwardWhat are the objectives of regulators? Under what conditions is regulation most likely to raise welfare?arrow_forward
- explain what happens to a monopoly firm operating in the long-run.arrow_forwardUse the cost and revenue data to answer the questions. Quantity Price Total revenue Total cost 10 90 900 675 15 80 1200 825 20 70 1400 1025 25 60 1500 1250 30 50 1500 1500 35 40 1400 1850 If the firm is a monopoly, what is marginal revenue when the quantity is 25? MR= What is the marginal cost when quantity is 15? MC= If this firm is a monopoly, at what quantity will marginal profit be $0.00? Quantity= If this is a perfectly competitive market, which quantity will be produced? Quantity=arrow_forwardWhy might a service business be more selective than a goods-producingbusiness regarding the customers it pursues or accepts?arrow_forward
- How was De Beers able to control the world price of diamonds over the past several decades even though it produced only 45 percent of the diamonds? What factors ended its monopoly? What is its new profit strategy?arrow_forwardEconomic theory leads to the conclusion that an unregulated market that is controlled by a monopoly will lead to an inefficient outcome. Discuss how this conclusion has influenced U.S. policy with respect to regulation of business.arrow_forwardAndrea’s Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to charge to maximize profits. The first two columns in the table below provide the price and quantity for the demand curve for treatments. The fifth column shows its total costs. Complete the table. What is the profit-maximizing level of output for the treatments and how much will the firm earn in profits? Price Quantity Total Revenue Marginal Revenue Total Cost Marginal Cost $25 0 $0 N/A $130 N/A $24 10 $275 $23 20 $435 $22.50 30 $610 $22 40 $800 $21.60 50 $1005 $21.20 60 $1225arrow_forward
- What are the economic benefits of perfect competition compared to a monopoly?arrow_forwardNot copy pastearrow_forwardSuppose the local electrical company, a legal monopoly based on economies of scale, was split into four firms of equal size, with the idea that eliminating the monopoly would promote competitive pricing of electricity. What do you anticipate would happen to prices? Why? Use the editor to format your answerarrow_forward
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