Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 16, Problem 5MCQ
To determine
Among the given options, identify the correct one on the basis of below statement:
A single-price
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Draw the graph. If the monopoly is a doing perfect price discrimination, then:
the monopoly produces a quantity Q = ______ where ________________ (which curves intersect?)
the monopoly charges a price of ________ (trick question!!!!)
the consumer surplus is CS = ______.
the producer surplus is PS = _________(identify the area on the graph and calculate it).
this monopoly ________ (is / is not) efficient because ______________________.
Consider a monopoly firm producing laptops. Below are the equations describing this firm's economic conditions.
Demand: Q = 10 – P
Marginal Revenue: MR= 10 – 2Q
Total Cost: TC = 4 + Q + 0.5Q²
||
Marginal Cost: MC=1+Q
Choose all correct statements.
The produced quantity is 3.
В.
The price charged is 6.
n C.
The profit this monopoly firm can make is 9.5.
D.
None of above is correct.
An unregulated natural monopoly bottles Liquid Sunlight, a unique product with no substitutes.
The monopoly's total fixed cost is $190,000 and its marginal cost is 30 cents a bottle.
How many bottles of Liquid Sunlight does the monopoly sell and what is the price of a bottle of
Liquid Sunlight?
Is the monopoly's use of resources efficient?
The graph shows the demand curve for Liquid Sunlight.
Draw the marginal revenue curve. Label it MR.
Draw the marginal cost curve. Label it MC.
Draw a point at the monopoly's profit-maximizing quantity and price.
60
50-
40-
30-
20-
10-
0-
Price and cost (cents per bottle)
0
D
0.5
1.5
2
Quantity (millions of bottles per year)
>>> Draw only the objects specified in the question.
2.5
Chapter 16 Solutions
Foundations of Economics (8th Edition)
Ch. 16 - Prob. 1SPPACh. 16 - Prob. 2SPPACh. 16 - Prob. 3SPPACh. 16 - Prob. 4SPPACh. 16 - Prob. 5SPPACh. 16 - Prob. 6SPPACh. 16 - Prob. 7SPPACh. 16 - Prob. 8SPPACh. 16 - Prob. 9SPPACh. 16 - Prob. 10SPPA
Ch. 16 - Prob. 11SPPACh. 16 - Prob. 1IAPACh. 16 - Prob. 2IAPACh. 16 - Prob. 3IAPACh. 16 - Prob. 4IAPACh. 16 - Prob. 5IAPACh. 16 - Prob. 6IAPACh. 16 - Prob. 7IAPACh. 16 - Prob. 8IAPACh. 16 - Prob. 9IAPACh. 16 - Prob. 10IAPACh. 16 - Prob. 1MCQCh. 16 - Prob. 2MCQCh. 16 - Prob. 3MCQCh. 16 - Prob. 4MCQCh. 16 - Prob. 5MCQCh. 16 - Prob. 6MCQCh. 16 - Prob. 7MCQ
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- When does a company officially become a monopoly? a. when it controls more than 25 percent of the output of a certain product b. when the government decides the company is a threat to the national economy c. when a company controls the output for a marketable product without meaningful competition d. when a company controls more than 50 percent of the output of a productarrow_forwardCurrently the market for domestic air travel in OzLand is a monopoly with Qanwings as the supplier. A new supplier, Cheap Flights, enters the market. Suppliers in the market compete by simultaneously choosing the quantity of flights they will supply. Which of the following is most likely to occur after the entry of the new supplier to the market for domestic air travel? a.The total quantity of flights will increase. b.The total quantity of flights will not change. c.The total quantity of flights will decrease. d. It is not possible to say what will happen to the quantity of flights.arrow_forwardHot Air Balloon Rides is a single-price monopoly. Columns 1 and 2 of the table set out the market demand schedule and columns 2 and 3 set out the total cost schedule. Now suppose that the government places a fixed tax on Hot Air's profit of $50 a month. Calculate Hot Air's new profit-maximizing output and price. When Hot Air is producing its new profit-maximizing output, the number of rides it produces is a month and the profit-maximizing price of a ride is $ >>> Answer to 1 decimal place. C Price (dollars per ride) 180 170 160 150 140 130 Quantity (rides per month) 0 G A WNIO 2 3 4 5 Total cost (dollars per month) 25 150 285 430 585 750arrow_forward
- Hot Air Balloon Rides is a single-price monopoly. Columns 1 and 2 of the table set out the market demand schedule and columns 2 and 3 set out the total cost schedule. Now suppose that the government places a fixed tax on Hot Air's profit of $40 a month. Calculate Hot Air's new profit-maximizing output and price. When Hot Air is producing its new profit-maximizing output, the number of rides it produces is a month and the profit-maximizing price of a ride is $ >>> Answer to 1 decimal place. CH Price (dollars per ride) 150 140 130 120 110 100 Quantity (rides per month) 0 1 2345 Total cost (dollars per month) 50 175 310 455 610 775arrow_forwardConsider the following market demand p= 20 - 0.02 Q where p is the price in $ or kilo and Q is the quantity demanded in kilo/ per week.The marginal cost of schedule is given by MC = 2 + 0.03 Q. a. if this were a perfectly competitive market what would be the equilibrium price and quantity show your work? b. if this were a monopolized market what would be the equilibrium price and quantity show your work? c. what is the dead weight loss in the monopolized market give the number and show your work?arrow_forwardA monopoly charges higher; lower O higher; higher lower; higher lower; lower prices and produces a quantity than a competitive market.arrow_forward
- Figure: Demand Elasticity Price MR D Quantity Monopoly A Price MR D Quantity Monopoly Barrow_forwardDraw the graph. If the monopoly is a doing perfect price discrimination, then: 1. the monopoly produces a quantity Q = ______ where ________________ (which curves intersect?)2. the monopoly charges a price of ________ (trick question!!!!)3. the consumer surplus is CS = ______. 4. the producer surplus is PS = _________(identify the area on the graph and calculate it).5. this monopoly ________ (is / is not) efficient because ______________________.arrow_forwardHi. I have this question for an assignment, I think someone doing an example step by step would be extremely helpful. So, if someone could pick whatever demand function they want and answer the following questions, that would be greatly appreciated.a) If the MC is $8/unit, find the equilibrium price and quantity under perfect competition and Monopoly. b) If the government places a tax of $2/unit on production in each case, find the new price and quantity under perfect competition and Monopoly. c) Comment on the incidence of the tax in each case.arrow_forward
- Which of the following statements is true of a monopoly as compared to a perfectly competitive market with the same costs? * Consumer surplus is smaller. Profit is smaller. Deadweight loss is smaller. Total surplus is larger. O Quantity is larger.arrow_forwarda) What are the output and price where the firm’s profit is maximum? What is the firm’s economic profit? Show solution. b) Determine the deadweight loss for this market. What is the source of the deadweight loss in a monopoly? c) If government regulators where to ask the firm to charge a price and quantity that would be socially (or allocatively) efficient, what would these price and quantity be? At this output and price, what would happen to the consumer surplus, producer surplus and total surplus compared to the situation under monopoly.arrow_forwardA monopoly barber sells haircuts to adults for 30 and A monopoly barber sells haircuts to adults for $30 and to children for $10. Let ηΑ represent adults’ elasticity of demand for haircuts and let ηC represent children’s elasticity of demand.a. Explain why |ηΑ| and |ηC| must both be greater than 1.b. Find a formula for ηA in terms of ηC.c. What is the largest possible value for |ηΑ|? A monopoly barber sells haircuts to adults for 30 andarrow_forward
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