Microeconomics
10th Edition
ISBN: 9781259655500
Author: David C Colander
Publisher: McGraw-Hill Education
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Question
Chapter 14, Problem 7QE
To determine
Profit maximizing positions for a perfect competitor and a monopolist.
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Refer to Diagram 2 above, which represents a monopolist firm, to answer the following questions.
product = marginal product x selling price per unit).
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Chapter 14 Solutions
Microeconomics
Ch. 14.1 - Prob. 1QCh. 14.1 - Prob. 2QCh. 14.1 - Prob. 3QCh. 14.1 - Prob. 4QCh. 14.1 - Prob. 5QCh. 14.1 - Prob. 6QCh. 14.1 - Prob. 7QCh. 14.1 - Prob. 8QCh. 14.1 - Prob. 9QCh. 14.1 - Prob. 10Q
Ch. 14.A - Prob. 1QECh. 14.A - Prob. 2QECh. 14.A - Prob. 3QECh. 14.A - Prob. 4QECh. 14 - Prob. 1QECh. 14 - Prob. 2QECh. 14 - Prob. 3QECh. 14 - Prob. 4QECh. 14 - Prob. 5QECh. 14 - Prob. 6QECh. 14 - Prob. 7QECh. 14 - Prob. 8QECh. 14 - Prob. 9QECh. 14 - Prob. 10QECh. 14 - Prob. 11QECh. 14 - Prob. 12QECh. 14 - Prob. 13QECh. 14 - Prob. 14QECh. 14 - Prob. 15QECh. 14 - Prob. 16QECh. 14 - Prob. 17QECh. 14 - Prob. 18QECh. 14 - Prob. 20QECh. 14 - Prob. 21QECh. 14 - Prob. 22QECh. 14 - Prob. 23QECh. 14 - Prob. 1QAPCh. 14 - Prob. 2QAPCh. 14 - Prob. 3QAPCh. 14 - Prob. 4QAPCh. 14 - Prob. 5QAPCh. 14 - Prob. 6QAPCh. 14 - Prob. 7QAPCh. 14 - Prob. 1IPCh. 14 - Prob. 2IPCh. 14 - Prob. 3IPCh. 14 - Prob. 4IPCh. 14 - Prob. 5IPCh. 14 - Prob. 6IPCh. 14 - Prob. 7IPCh. 14 - Prob. 8IPCh. 14 - Prob. 9IP
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Similar questions
- Imagine any market divided by 2 Cournot oligopolists who have identical costs Marginal cost = Average cost = 200. About this market, ask yourself: a) If the demand curve for this market is given by Q = 1250 - 2.5P, where Q is the total quantity demanded in the market and P is the selling price, both given in units, what is the reaction curve of the oligopolists? b) What will be the quantity produced and the selling price of the oligopolists? c) A strategist considers that a good marketing campaign would be able to expand the Demand of this market to Q = 1,500 - 2.5P and that in this way, oligopolists could produce the same amount and make significantly greater profits. Such a campaign would generate a reduction in profits in the order of 70,000. Is it worth making this investment in marketing?arrow_forwardMonopoly and Price Elasticity Consider the relationship between monopoly pricing and the price elasticity of demand. If demand is inelastic and a monopolist raises its price, quantity would fall by a (LARGER AND SMALLER) percentage than the rise in price, causing profit to (DECREASE OR INCREASE) . Therefore, a monopolist will (ALWAYS, NEVER OR SOMETIMES) produce a quantity at which the demand curve is elastic. Use the purple segment (diamond symbols) to indicate the portion of the demand curve that is inelastic. (Hint: The answer is related to the marginal-revenue (MR) curve.) Then use the black point (plus symbol) to show the quantity and price that maximizes total revenue (TR).arrow_forwardSuppose that a monopolistic seller of designer handbags faces the following inverse demand curve: P= 50 – 0.4q. The seller can produce handbags for a constant marginal and average total cost of $10. Calculate the profit-maximizing price for this seller. Now, suppose the government levies a $4 tax per unit on sellers of handbags. Calculate how this tax will affect the price the monopolist charges its customers and who will bear the burden of this tax.arrow_forward
- Consider 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_forwardCritically evaluate and explain each statement: Because they can control product price, monopolists are always assured of profitable production by simply charging the highest price consumers will pay.arrow_forwardSuppose that a monopolist can engage in perfect (first degree) price discrimination. The monopolist faces demand curve P = 50 - 5Q, has a marginal revenue (MR) curve of MR = 50 - 10Q, and has a marginal cost (MC) curve of MC = 10. What price does this FIRST DEGREE (perfect) price discriminating monopolist charge? Type your numeric answer and submitarrow_forward
- Consider the relationship between monopoly pricing and the price elasticity of demand. If demand is inelastic and a monopolist raises its price, total revenue would (DECREASE OR INCREASE) and total cost would(DECREASE OR INCREASE) . Therefore, a monopolist will (SOMETIMES, ALWAYS, NEVER) produce a quantity at which the demand curve is inelastic. Use the purple segment (diamond symbols) to indicate the portion of the demand curve that is inelastic. (Hint: The answer is related to the marginal-revenue (MR) curve.) Then use the black point (plus symbol) to show the quantity and price that maximizes total revenue (TR).arrow_forwardA product may be provided by a monopolist, but the market may be contestable. How can it be that a monopoly can be as efficient as a perfectly competitive market?arrow_forwardWith a kinked demand curve, can an oligopolist increase revenue by raising or cutting price? Explain using the concept of elasticity.arrow_forward
- why do perfectly competitive firms maximize their profits by producing so that the price is equal to marginal cost, but monopolists maximize their profits by setting a price that is greater than marginal cost?arrow_forwardWhat is the difference between the price elasticity of demand for a monopolist and the price elasticity of demand for a monopolistic competitor? Select the correct answer below: Monopolists face a higher elasticity of demand than monopolistic competitors. Monopolists face a lower elasticity of demand than monopolistic competitors. Both markets face perfectly elastic demand. The elasticity of demand for monopolists and monopolistic competitors depends on the industry not on the market type. Aarrow_forwardWhy does the monopolist always produce only until that level of output where the own-price elasticity of demand is equal to unity ? Elucidate this either graphically or algebraicallyarrow_forward
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