MICROECONOMICS (LL)-W/ACCESS >CUSTOM<
11th Edition
ISBN: 9781264207718
Author: Colander
Publisher: MCG CUSTOM
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Question
Chapter 14, Problem 9QE
(a)
To determine
Graphical representation of MC,
(b)
To determine
The quantity of output produced by the monopolist.
(c)
To determine
The equilibrium level of output for a
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a)Draw the cost curves for a typical firm. Explain how a competitive firm chooses the level of output that maximizes profit. At that level of output, show on your graph the firm’s total revenue and total cost.
b)Draw the demand curve, marginal revenue curve, average total cost curve, and marginal-cost curve for a monopolist. Show the profit-maximizing level of output, the profit-maximizing price, and the amount of profit.
c)Why the demand curve for a firm operating in monopolistic competition is more elastic compared to the firm operating as a monopoly.
The 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.?
a. At what output rate and price does the monopolist operate?
b. In equilibrium, approximately what is the firm’s total cost and total revenue?
c. What is the firm’s economic profit or loss in equilibrium?
Chapter 14 Solutions
MICROECONOMICS (LL)-W/ACCESS >CUSTOM<
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. 19QECh. 14 - Prob. 20QECh. 14 - Prob. 21QECh. 14 - Prob. 22QECh. 14 - Prob. 23QECh. 14 - Prob. 24QECh. 14 - Prob. 25QECh. 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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- Draw the cost curves for a typical firm. Explain how a competitive firm chooses the level of output that maximizes profit. At that level of output, show on your graph the firm’s total revenue and total cost. Draw the demand curve, marginal revenue curve, average total cost curve, and marginal-cost curve for a monopolist. Show the profit-maximizing level of output, the profit-maximizing price, and the amount of profit. Why the demand curve for a firm operating in monopolistic competition is more elastic compared to the firm operating as a monopoly. kindly solve all the parts.arrow_forwardSuppose a monopolist is currently producing where its variable costs are $1 million. Its fixed costs are $1.5 million. Its revenues are $1.2 million. Should the firm shut down in the short run? Should it leave the industry in the long run? a no; yes b no; no c yes; yes d yes; noarrow_forwardExercise 3.3. Suppose a profit-maximizing monopolist is producing 800 units of output and is charging a price of $40 per unit. a. If the elasticity of demand for the product is -2, find the marginal cost of the last unit produced. b. What is the firm's percentage markup of price over marginal cost? c. Suppose that the average cost of the last unit produced is $15 and the firm's fixed cost is $2000. Find the firm's profit.arrow_forward
- A monopolist firm faces a demand with constant elasticity of -1.3. It has a constant marginal cost of $18 per unit and sets a price to maximize profit. If marginal cost should increase by 20 percent, would the price charged also rise by 20 percent? A. Yes. Since the price elasticity of demand is constant, P = 1.3MC. Thus, if MC increases by 20 percent, price also increases by 20 percent. B. No. Since the demand curve is downward sloping, a 20 percent increase in MC will cause the price to increase by more than 20 percent. OC. Yes. Since the price elasticity of demand is constant, P = 4.33MC. Thus, if MC increases by 20 percent, price also increases by 20 percent. OD. No. Since the demand curve is downward sloping, a 20 percent increase in MC will cause the price to increase by less than 20 percent.arrow_forwardCurrently, a monopolist's profit-maximizing output is 500 units per week and it sells its output at a price of $80 per unit. The firm's total costs are $6,000 per week. The firm is maximizing its profit, and it earns $35 in extra revenue from the sale of the last unit produced each week. Instructions: Enter your answers as whole numbers. a. What are the firm's weekly economic profits? %24 b. What is the firm's marginal cost? %24 c. What is the firm's average total cost? %24arrow_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
- How can a monopolist maximize its profits? a.) Produce maximum output where marginal cost and price are equal. b.) Finding the output where MR = MC and producing and charging the price corresponding to that output level on the demand curve. c.) Setting the price at the demand curve's highest point and output where MR = MC. d.) Setting the price level where marginal cost is minimized.arrow_forwardExplains it correctly. Not copy paste.last time incorrect solution given so carefully detaulsarrow_forwardVirat Cement is a monopolist in the cement industry. Its cost is C = 100 - 5Q + Q ^ 2 and demand is P = 55 -2Q. (MC is the supply function). A. What price should Virat Cement set to maximize profit? B. What output does the firm produce and determine its profits? C. What would output and price be if the firm acted like a perfect competitor and set MC = P?arrow_forward
- 1. For a firm in a perfectly competitive market, its marginal revenue a) is constant with respect to the quantity produced. b) increases with the quantity produced. c) decreases with the quantity produced. d) is inversely proportional to the quantity produced. 2. Which of the following is a characteristic of a monopolist firm but not of a perfectly competitive firm? a) A monopolist firm maximizes profit by producing at a level such that MR = ATC. b) A monopolist firm is a price taker.c) The demand facing a monopolist firm is downward sloping.d) A monopolist firm does not have market power.arrow_forwardConsider a monopolist with the following demand curve. Price: 24, 22 , 20, 18, 16, 14, 12, 10, 8, 6 Quantity Demanded: 1, 2, 3, 4, 5, 6, 7, 8, 9, 10 [All answers are integers with no units.] 1.If this firm has a marginal cost of $12 per unit, how many will they produce? 2.What will their profit be? 3.What will consumer surplus be? (Rectangle method!) 4.What is the efficient quantity?arrow_forwardA single-price monopolist faces an inverse market demand curve given as P (Q) = 100 − Q. The firm's total cost curve is C (Q) = 100 + 40Q + 1Q2. a. What are the equilibrium price and quantity in this market? (Find the profit maximizing quantity and price) (Round your answer to two decimal places and use it in the following parts) b. What are the firm's economic profits and economic rents? (Round your answer to two decimal places) c. What is the deadweight loss of this monopoly? (Round your answer to two decimal places)arrow_forward
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