Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Chapter 13, Problem 2.5P
To determine
The graph on
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MC - ATC
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300
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Unita of output, Q
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Label B
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MC = ATC
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Instructions: Make sure the interactive is set to "Natural Monopoly" on the upper right side of the Graph section. When "Natural Monopoly" is selected, it will have a dark blue background.With the Cost Structure (in the settings section) set to "a"a. What is the profit maximizing quantity? unitsb. What is the maximum profit that can be earned? $With the Cost Structure (in the settings section) set to "e"c. What is the profit maximizing quantity? unitsd. What is the maximum profit that can be earned? $Let the Cost Structure remain at "e"e. If the firm decides to produce 80 units (where the average total cost equals demand - P = ATC) the Revenue is $ are $ and profits are $
Review the graph at right.
What is the unregulated monopoly price? $60 (enter your response as
a whole number)
What is the unregulated monopoly output? (enter your response as
a whole number)
The total unregulated welfare (CS+PS) is $. (round your answer to
the nearest penny)
What is the optimal monopoly regulated price? S
response as a whole number)
(enter your
The total regulated welfare (CS+ PS) is $ (round your answer to
the nearest penny)
Price
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Chapter 13 Solutions
Principles of Economics (12th Edition)
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- Sara is a single-price, profit-maximizing monopolist who sells her own patented perfume (shown in the graph below). a. What is the equilibrium price and quantity under monopoly conditions? b. If instead Sara had to operate like a competitive firm, what would be the equilibrium price and quantity? c. What is the deadweight loss and total loss to consumer surplus when Sara operates as a monopoly? d. How much surplus would Sara have if she could act as a perfectly price-discriminating monopolist?arrow_forwardFrom our textbook and in your own words, define what a monopoly is. In your response, address the following: What are some disadvantages and advantages of a monopoly compared to brand competition? Is there a trend toward consolidation in some markets, and if so, what does that mean to you, the consumer? What is better for you, the consumer, monopoly, or brand competition? Please use current research in your response. Here are some ideas that might help you get started. Ninety-two percent of the prescription drugs sold in the United States come from just three wholesalers. Coke owns over 200 brands, including names like Schweppes, Dr. Pepper, Fanta, and Powerade. Nestle owns over 2,000 brands. Hospital consolidation has.arrow_forwardWhy does the marginal revenue of a monopoly firm decrease with the increase in quantity of output sold? In this case, with the help of a graph show how the firm maximizes its profit.arrow_forward
- The graph below shows the demand, revenue and cost curves for a monopoly operating in the short run. Use the graph to answer the questions that follow: Price and costs (dollars per unit) S 4 3 N 0 20 MC 40 MR 60 80 100 120 Quantity (units per day) What is the consumer surplus given change from monopoly to perfect competitor? ATC Darrow_forwardIs this a natural monopoly?arrow_forwardThe above table provides some data for a monopoly firm. What is the profit maximizing point of production for this firm? Assume that the firm can only produce and sell whole units (discrete case). Price Quantity Demanded Total Cost $40 1 $270 35 2 280 30 3 295 25 4 320 20 5 360 A. 1 B. 2 C. 3 D. 4 E. 5arrow_forward
- Draw a diagram and give a brief explanation that shows the cost and revenue curves assuming a firm can now operate as a monopoly.arrow_forwardecon 3144arrow_forwardA monopoly market is characterized by the profit maximizer, price maker, high barriers to entry, single seller, and price discrimination. The information on the table below is a typical monopoly firm. Use it to answer the questions that follow Output Price Total Cost 0 $100 $200 1 100 290 2 100 350 3 100 390 4 100 470 5 100 560 6 100 700 7 100 900 i. What is the profit maximizing or loss minimizing quantity of output of this firm to produce? Why? ii. What is the profit or loss at the profit maximizing or loss minimizing output level? iii. Should the firm shut down or remain in operation? Why? iv. Assuming this is a representative firm in the industry or market, given the profits or losses incurred, what can be expected to happen over time in the market?arrow_forward
- Use the following Table showing the demand schedule for a monopolist facing a constant marginal cost of $4. Assume that the firm pays no fixed costs. How many units of output will the firm produce, and how much economic profit will be earned? Quantity Demanded 1 2 3 4 5 6 7 8 9 Price $12 $11 $10 $9 $8 $7 $6 $5 $4 A) 5 units; $8 B) 5 units; $40 C) 7 units; $36 D) 7 units; -$6 E) 5 units; $20arrow_forwardConfused and not sure how to solve correctlyarrow_forwardHomework Unanswered A monopoly is producing where marginal cost is $10,000 and marginal revenue is $15,000 in an industry where demand is above the average cost. Place the following actions in order to describe the steps the monopoly would take to maximize its profits. Drag and drop options into correct order and submit. For keyboard navigation... SHOW MORE III = E The firm realizes that as it increase production, total revenue will go up by more than cost increases. III = ||| The quantity produced will be larger than at the beginning and the price will be lower. = The monopoly will produce more units up to the point where marginal cost equals marginal revenue. The monopoly will make positive economic profits at the new price and quantity. As they increase quantity price is determined by the demand curve. There will be a surplus if the price is too high. Unanswered Submitarrow_forward
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