MICROECONOMICS
MICROECONOMICS
11th Edition
ISBN: 9781266686764
Author: Colander
Publisher: MCG
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Chapter 15, Problem 2QAP

(a)

To determine

Explanation of the opinion about the statement.

(b)

To determine

Problem of the argument.

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What are the four most important ways a firm becomes a monopoly? Will a monopoly that maximizes profit also be maximizing revenue? Will it be maximizing output? Explain.   Assume the graph below represents the market for a monopolist. What quantity will the monopolist produce, and what price will she charge? What will her total revenue, costs, and profit be at this level of production? What will the deadweight loss for society be at this level of production? (Assume the MC curve is a straight line between the relevant points for this calculation.)   3. U.S. antitrust laws are designed to prohibit monopolization and encourage competition. Why, then, does the government erect barriers to entry and create monopoly power by granting firms patents?
What are the four most important ways a firm becomes a monopoly? Will a monopoly that maximizes profit also be maximizing revenue? Will it be maximizing output? Explain.  Assume the graph below represents the market for a monopolist. What quantity will the monopolist produce, and what price will she charge? What will her total revenue, costs, and profit be at this production level? What will the deadweight loss for society be at this level of production? (Assume the MC curve is a straight line between the relevant points for this calculation.)
Prior to 1995, Taiwan had only one beer producer, a government-owned monopoly called Taiwan Beer. Suppose that while it was a monopoly, the company was run in a way to maximize profit for the government. That is, assume that it behaved like a private, profit-maximizing monopolist. Assuming demand and cost conditions are given on the following diagram, at what level would Taiwan Beer have targeted output and what price would it have charged? Now suppose that while it was a monopoly, Taiwan Beer decided to compete in the highly competitive American market. Assume further that Taiwan maintained import barriers so that American producers could not sell in Taiwan but that they were not immediately reciprocated. Assuming Taiwan Beer could sell all that it could produce in the American market at a price P = Pu.s., indicate the following: Total output is given by Initial output sold in Taiwan is given by The new price in Taiwan after the U.S. market opens is The output sold in the U.S. is…
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