Economics For Today
10th Edition
ISBN: 9781337670654
Author: Tucker
Publisher: Cengage
expand_more
expand_more
format_list_bulleted
Question
Chapter 13, Problem 10SQP
(a)
To determine
(b)
To determine
Price charged by the monopolist by using marginal cost pricing.
(c)
To determine
Reason for the monopolist charging fair-return price.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
I will rate and like, thank you! Easy economics question.
Create graph that includes:
Demand curve, marginal cost, and marginal revenue.
Identify the profit-maximizing quantity and price for this monopolist. To do this you will need to determine marginal revenue at each level of output. Choose output that satisfies the monopolist’s profit maximizing condition of MR = MC.
Does this firm earn a profit? How much profit if they do?
Create graph that includes:
Demand curve, marginal cost, and marginal revenue.
Identify the profit-maximizing quantity and price for this monopolist. To do this you will need to determine marginal revenue at each level of output. Choose output that satisfies the monopolist’s profit maximizing condition of MR = MC.
Does this firm earn a profit? How much profit if they do?
Being the only producer in a monopoly market, can a monopolist charge a very high price to maximize profit? Why, or why not?From a societal point of view, can we claim that perfect competition and monopoly are equally efficient? Why, or why not? Explain.
Chapter 13 Solutions
Economics For Today
Ch. 13.2 - Prob. 1YTECh. 13.6 - Prob. 1.1YTECh. 13.6 - Prob. 1.2YTECh. 13 - Prob. 1SQPCh. 13 - Prob. 2SQPCh. 13 - Prob. 3SQPCh. 13 - Prob. 4SQPCh. 13 - Prob. 5SQPCh. 13 - Prob. 6SQPCh. 13 - Prob. 7SQP
Ch. 13 - Prob. 8SQPCh. 13 - Prob. 9SQPCh. 13 - Prob. 10SQPCh. 13 - Prob. 11SQPCh. 13 - Prob. 12SQPCh. 13 - Prob. 1SQCh. 13 - Prob. 2SQCh. 13 - Prob. 3SQCh. 13 - Prob. 4SQCh. 13 - Prob. 5SQCh. 13 - Prob. 6SQCh. 13 - Prob. 7SQCh. 13 - Prob. 8SQCh. 13 - Prob. 9SQCh. 13 - Prob. 10SQCh. 13 - Prob. 11SQCh. 13 - Prob. 12SQCh. 13 - Prob. 13SQCh. 13 - Prob. 14SQCh. 13 - Prob. 15SQCh. 13 - Prob. 16SQCh. 13 - Prob. 17SQCh. 13 - Prob. 18SQCh. 13 - Prob. 19SQCh. 13 - Prob. 20SQ
Knowledge Booster
Similar questions
- The diagram above represents a monopolist firm. Answer the following questions: What price will this firm charge and what quantity produced in order to maximize profit? Explain your answer. If this firm becomes regulated and the regulatory agency want to achieve economic efficiency, what will be the price and quantity? Explain your answer. If the monopolist operates at the economic efficiency level, will he be making a profit or loss? Explain. Suppose the regulatory agency wants the monopolist to charge a price that matches what it costs to produce a unit of the good/service. What price will this be and what would be the quantity produced? Explain. At a price ceiling of $41 what would be the profit/loss of the monopolist?arrow_forwardThe inverse demand function in the industry is p(y)=10-2y. The marginal costs are constant and equal 2, the fixed costs are zero. a. If the industry is perfectly competitive, what are the equilibrium output and price? b. If there is a single monopolist in the industry, what are the equilibrium output and price? What is the profit? c. Suppose now that the monopolist can perfectly discriminate all customers and charge different prices. How many units will be sold and what will be the profit? d. Find the deadweight loss due to monopolies in parts b. and c.?arrow_forwardA monopolist faces the inverse daily demand curve P = 20 – 0.005Q, and has the total cost curve C(Q) = 10Q. a. Find the profit-maximizing price and output, and the firm’s daily profit. b. Find the firm’s Lerner Index at the monopoly price and output. Why is this a measure of market power? What determines its value? c. If this industry was perfectly competitive instead of a monopoly, and that all the firms had a constant marginal cost MC(q) = 10. What would be the industry output and price at a perfectly competitive equilibrium?arrow_forward
- With regard to market structure, answer the following: (a) A monopolist never produces in the inelastic portion of its demand curve. True or false? Why? (b) Draw a figure showing a monopolist producing at the lowest point on its long-run average cost curve. (c) What is third degree price discrimination? Why does a monopolist practice it? What are the conditions are necessary for the monopolist to be able to practice it? Give a real-world example of third degree price discrimination? (c) If the price elasticity of demand is -3 in market 1 and -2 in market 2 and the price in market 1 is $12, what price should a monopolist practicing third degree price discrimination set in market 2?arrow_forwardGive typing answer with explanation and conclusion A monopolist has a demand curve given by P = 88 − Q and a total cost curve given by TC = 34 + Q2. The associated marginal cost curve is MC = 2Q. Suppose the monopolist also has access to a foreign market in which he can sell whatever quantity he chooses at a constant price of 60. How much will he sell in the foreign market? What will his new quantity and price be in the original market?arrow_forwardConsider a monopolist market, X. The demand for the product is as follows: Px = 100 – Qx. The firm uses 1 Y to produce one X, and product Y is produced by another monopolist firm. Who benefits if these two firms merge together to create a large vertically integrated monopoly? a.X producer is better off, Y producer and consumers are worse off. b.Both firms are better off, consumers are worse off. c.Both firms and consumers are better off. d.Consumers are better off, both firms are worse offarrow_forward
- 2. A monopolist faces the demand curve p=250-2q and its total cost function is given by TC = F + 10q, where F is a non-negative fixed cost. a. Find the profit-maximising price and quantity produced for the monopolist. b. What is the highest value of F that allows the firm to earn profits (of zero or more) rather than losses?arrow_forwardHow is it possible for monopolists to earn profits in the long run? options: Because the barriers to entry which keep out competitors. Because the free entry allows new competitors into the industry. Because the monopolist always has a cost advantage over their competitors. Because price is greater than marginal revenue for the monopolist.arrow_forwardConsider a monopolistic business. What sort of demand curve does a monopolist face in contrast to a corporation that is fully competitive? What effects does the monopolist demand curve have on how prices and quantities are set?arrow_forward
- A monopolist faces a market demand curve given by Q = 70 – P. The Monopolist’s marginal revenue function is given by: MR = 70 - 2Q. a. If the monopolist can produce at constant average and marginal costs of AC = MC = 6, i. What output level will the monopolist choose in order to maximize profits? ii. What is the price at this output level? iii. What are the monopolist’s profits? Show all working and draw grapharrow_forwardThe accompanying graph depicts the marginal revenue (MR), demand (D), and marginal cost (MC) curves for a monopoly. 100 a. Place point P1 at the profit maximizing price and quantity 95 assuming that the monopolist can only charge a single price. 90 85 80 75 70 1 b. What are the profits of the firm if it charges a single price? 65 60 55 50 45 40 35 30 25 MC 20 15 Suppose the monopolist able to successfully price 10 discriminate between two groups by charging one group $70 5 MR and charging $35 to the other group. 05 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95100 Quantity c. What are the firm's profits if it charges the two prices as mentioned above? $ Price and Costs($)arrow_forwardAnswer all the questions: Identify the market structure that is characterized by a single seller Identify the market structure that is characterized by each seller selling identical products. Identify the type of elasticity that applies to a demand curve for a single firm in a perfectly competitive market Explain why the demand curve for a monopolist is inelastic. Identify two ways governments try to reduce the market power of monopoliesarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning