Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
expand_more
expand_more
format_list_bulleted
Question
Chapter 14, Problem 14.11P
a)
To determine
To know:
b)
To determine
Calculation of marginal and
c)
To determine
To calculate:Calculation of marginal and average cost from total cost.
d)
To determine
To plot:Graphical representation of average cost curve.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Assume that the demand for electric cars is p = 100-q (where q is the quantity and p is the price), and that an innovation can reduce the constant marginal cost of production from 70 to 60.
What is the definition of nondrastic/drastic innovation?
Confirm that the innovation for electric cars is nondrastic.
Show that marginalcost would have to be reduced to less than 40 for theinnovation to bedrastic.
Suppose that the industry is a monopoly (not threatened by entry). Howmuch is this firm willing to pay to acquire the innovation?
The following graph shows the demand (D) for gas services in the imaginary town of Utilityburg. The graph also shows the marginal revenue (MR)
curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local gas company, a natural monopolist.
On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist.
20
18
Monopoly Outcome
16
14
12
10
8
ATC
MC
MR
2
3
5
7
8
10
QUANTITY (Hundreds of cubic feet)
Which of the following statements are true about this natural monopoly? Check all that apply.
The gas company is experiencing economies of scale.
The gas company must own a scarce resource.
It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers.
The gas company is experiencing diseconomies of scale.
True or False: Without government regulation, natural monopolies always earn zero profit in the long run.
True
False
D.
2.
PRICE…
Below is a representation of the demand curve for diamonds. Assume DeBeers is operating as a monopoly.
1. As a monopolist, what is the total effect of a price change from $2,400 to $1,600 on revenue? Break this change into an increase and a decrease.
If you were to do exercise 1 in for every marginal change in price, you would find the marginal revenue curve. The marginal revenue diagram has been provided for the next exercises, along with the marginal costs for DeBeers.
Knowledge Booster
Similar questions
- What is the usual shape of a total revenue curve for a monopolist? Why?arrow_forward3. A monopoly sells its goods in the U.S. and Japanese markets. The American inverse demand function is: PA = 1403QA and the Japanese inverse demand function is: PJ = 100-2QJ Assume that the firm's marginal cost of production is m = = 50 in both countries. (a) If the firm can price discriminate (prevent resale between markets), what price will it charge, how much will it produce, and how much profit will it earn in each market. (b) Resolve the problem assuming that the firm cannot price discriminate (e.g., Pa = PJ = p). (c) Compare your results from (a) and (b). How does price discrimination impact the firms' profits? How does it impact consumers in the American and Japanese markets?arrow_forwardGeorge has a monopoly on burrito sales in a small town in Kansas. The burritos cost him a constant $5 each to produce. He faces following demand schedule for his product: Price Quantity Demanded $30 0 $25 1 $20 2 $15 3 $10 4 $5 5 $0 6 Under normal monopoly conditions, how many burritos should he produce, what price should he charge, and how much profit can he expect to make? Draw a graph under these assumptions showing (and calculating) producer surplus, consumer surplus, economic surplus, and deadweight loss. If George could engage in perfect price discrimination, how many burritos would he produce, what would his total revenue be, and how much profit would he earn? Draw a graph under these assumptions showing (and calculating) producer surplus, consumer surplus, economic surplus, and deadweight loss. Is society better off by allowing George to perfectly price discriminate? Defend your answer.arrow_forward
- I need help with part earrow_forwardPlease a detailed type response to the question below. Make sure the graph is clear and visible. Double-check your answer and work too!arrow_forwardWith the relevant equations, we can also compute the competitive and monopoly equilibria using algebra. Suppose that the market for bell peppers consists of a single firm. The market demand curve is assumed to be Demand : P = 9 - 2Q The marginal cost is MC = Q The marginal revenue is MR = 9-4Q Using this information, fill in the blanks with a numerical answer. The efficient (or competitive market equilibrium) output is Q= type your answer... type your answer... The monopoly outcome is a Q= type your answer... and the price is P= and a monopoly price P= type your answer...arrow_forward
- f) Suppose that the supply side of a monopoly.Calculate which quantity and associated price maximize the monopolist's profits.Also calculate the consumer surplus, producer surplus and socio-economic surplus.Illustrates graphically. g) Consider the following statement: "What is most profitable for a private company is also most profitable for society." The answer shall be based on economic theory, and within the framework of the syllabus for this exam.You may want to use factors and relevant calculations from the answer to previous sub-questions in this thesis to illustrate the reasoning the market described in task (d) alternatively consistsarrow_forwardTrue False Question Please Explainarrow_forwarddo I have the graph right? plus how do I answer the questionsarrow_forward
- I need solutions of B, Carrow_forwardThe accompanying graph depicts the marginal revenue (MR), demand (D), and marginal cost (MC) curves for a monopoly. Suppose the monopolist able to successfully price discriminate between two groups by charging one group $60 and charging $35 to the other group. c. What are the firm's profits if it charges the two prices as mentioned above?arrow_forwardHand written solutions are strictly prohibitedarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Microeconomics: Principles & PolicyEconomicsISBN:9781337794992Author:William J. Baumol, Alan S. Blinder, John L. SolowPublisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning
Microeconomics: Principles & Policy
Economics
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:Cengage Learning