Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 15.5, Problem 5QQ
To determine
The reason for the existence of monopoly in the market.
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Monopolies cause a lot of deadweight losses. Describe way through which policy makers can respond to inefficiencies caused by monopolies in an economy. List potential problems associated with each of these policy response mechanisms and the portfolio of the factors that you have consulted
Explain two ways policymakers respond to the inefficiencies of monopolists
We expect that monopolies will set a price ___________ their marginal cost.
Chapter 15 Solutions
Principles of Microeconomics
Ch. 15.1 - Prob. 1QQCh. 15.2 - Prob. 2QQCh. 15.3 - Prob. 3QQCh. 15.4 - Prob. 4QQCh. 15.5 - Prob. 5QQCh. 15 - Prob. 1CQQCh. 15 - Prob. 2CQQCh. 15 - Prob. 3CQQCh. 15 - Prob. 4CQQCh. 15 - Prob. 5CQQ
Ch. 15 - Prob. 6CQQCh. 15 - Prob. 1QRCh. 15 - Prob. 2QRCh. 15 - Prob. 3QRCh. 15 - Prob. 4QRCh. 15 - Prob. 5QRCh. 15 - Prob. 6QRCh. 15 - Prob. 7QRCh. 15 - Prob. 8QRCh. 15 - Prob. 1PACh. 15 - Prob. 2PACh. 15 - Prob. 3PACh. 15 - Prob. 4PACh. 15 - Prob. 5PACh. 15 - Prob. 6PACh. 15 - Prob. 7PACh. 15 - Prob. 8PACh. 15 - Prob. 9PACh. 15 - Prob. 10PACh. 15 - Prob. 11PA
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- true or false In the case of natural monopolies, economists argue that production is more efficient with several smaller firms rather than one large firm.arrow_forwardDoes a monopolist have a supply curve? Explain your answer. What are the different types of price discrimination? Differentiate between an oligopoly and a monopolistic competition (i.e. number of firms and the degree of product differentiation). How are skilled and unskilled workers in an economy likely to be affected if the firms adopt skill-biased technologies?arrow_forward8. Natural monopoly analysis The following graph gives the demand (D) curve for SG LTE services in the fictional town of Streamship Springs. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local 5G LTE 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. PRICE (Dollars per gigabyte of data) 20 18 16 14 12 10 8 2 0 0 1 MR 2 3 4 5 67 QUANTITY (Gigabyles of data) 8 ATC MC- 9 10 Monopoly Outcomearrow_forward
- Which two kinds of monopolies exist? Which is more economically efficient? Why?arrow_forwardcan you find examples of monopolies or near monopolies whose position can be attributed to public intervention? Elaborate on possible costs of monopoly in those cases.arrow_forwardThere is a monopolist in a market for a particular type of consumer goods. It is costly to create new types of products (brands) in this market, but consumers have different taste and thus some will prefer the new brand. Will the monopolist create too few brands or too many? Explain.arrow_forward
- Monopoly: Work It Out Earlier we mentioned the special case of a monopoly where MC = 0. Let’s find the firm’s best choice when more goods can be produced at no extra cost. Since so much e‑commerce is close to this model—where the fixed cost of inventing the product and satisfying government regulators is the only cost that matters—the MC = 0 case will be more important in the future than it was in the past. For each demand curve, calculate the profit-maximizing level of output and price as well as the monopolist's profit. a. ?=200−?P=200−Q, fixed cost = 1,000. Profit‑maximizing output Q = Profit‑maximizing price P = $ Monopolist's profit: $ b. ?=4,000−?P=4,000−Q, fixed cost = 900,000 (Driving the point home from part a) Profit‑maximizing output Q = Profit‑maximizing price P = $ Monopolist's profit: $ c. ?=120−12?P=120−12Q, fixed cost = 1,000…arrow_forward1. Which of the following companies most closely resembles a monopoly? Walmart Microsoft Starbucks McDonald's Question Source: Chiang 4e - Economics Princip 39 36 近arrow_forwardReview the graph at right. Monopoly What is the unregulated monopoly price? $ 60 (enter your response as a whole number) 100- 90- What is the unregulated monopoly output? 30 (enter your response as a whole number) MC 80- The total unregulated welfare (CS + PS) is $1800 (round your answer to the nearest penny) 70- 60- What is the optimal monopoly regulated price? $(enter your response as a whole number) 50- The total regulated welfare (CS + PS) is $. (round your answer to the nearest penny) 40- TMCE$30 30- 20- 10- 0- 10 Q#3 MR 20 30 40 50 60 70 80 90 100 Quantity O stv DEC 20 MacBook Air DII F10 FB F3 F4 FS F2 F1 # % & 1 2 3 4 5 7 8 9 { T Y P Q W E G H J K A > C V B command option tion command .. .- D.arrow_forward
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