Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 16, Problem 5SPPA
To determine
To explain:
If company 'H cable' (being a natural
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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.
Calculate Hot Air's profit-maximizing output and price.
Calculate the economic profit.
Hot Air's profit-maximizing number of rides is 3 a month
and the profit-maximizing price is $160 a ride.
>>> Answer to 1 decimal place.
C
Price
(dollars
per ride)
220
200
180
160
140
120
Quantity
(rides
per month)
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2
3
4
5
Total cost
(dollars per
month)
80
160
280
440
640
880
Sandy Cove is the only beach resort on a small island and the only beach activity it offers is jet ski rides.
The graph shows the marginal cost of a ride and the demand for rides. The resort is a single-price monopoly.
G
Draw the firm's marginal revenue curve. Start the curve at the y-axis. Label it.
The number of rides taken each hour is
>>> Answer to 1 decimal place.
The price of a ride is $
>>> Answer to 2 decimal places.
30-
25-
20-
15-
10-
5
Price and cost (dollars per ride)
MC
D
Quantity (rides per hour)
>>> Draw only the objects specified in the question.
Comcast has a cable monopoly. The following graph shows the demand, MR, and
MC curve of Comcast. Use the graph to answer questions 3 to 8.
Price (P) and Costs (in
dollars per subscription)
$25
$22
$21
$20
$19
0
5
6.5
MC
7
MR
ATC
Q (Number of subscriptions
in millions per month)
Chapter 16 Solutions
Foundations of Economics (8th Edition)
Ch. 16 - Prob. 1SPPACh. 16 - Prob. 2SPPACh. 16 - Prob. 3SPPACh. 16 - Prob. 4SPPACh. 16 - Prob. 5SPPACh. 16 - Prob. 6SPPACh. 16 - Prob. 7SPPACh. 16 - Prob. 8SPPACh. 16 - Prob. 9SPPACh. 16 - Prob. 10SPPA
Ch. 16 - Prob. 11SPPACh. 16 - Prob. 1IAPACh. 16 - Prob. 2IAPACh. 16 - Prob. 3IAPACh. 16 - Prob. 4IAPACh. 16 - Prob. 5IAPACh. 16 - Prob. 6IAPACh. 16 - Prob. 7IAPACh. 16 - Prob. 8IAPACh. 16 - Prob. 9IAPACh. 16 - Prob. 10IAPACh. 16 - Prob. 1MCQCh. 16 - Prob. 2MCQCh. 16 - Prob. 3MCQCh. 16 - Prob. 4MCQCh. 16 - Prob. 5MCQCh. 16 - Prob. 6MCQCh. 16 - Prob. 7MCQ
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- Idaho Water Services is a natural monopoly. The graph shows the demand curve, the marginal revenue curve, the marginal cost curve and the average total cost curve for the firm. Price and cost (cents per gallon) 110- 100- 90- 80- 70- 60- 50- 40- 30- 20- 10- 0- 0 ATC MC MR D 20 40 60 80 100 120 140 160 180 200 Quantity (millions of gallons per month) Draw a shape that shows the consumer surplus. Label it CS. >>> Draw only the objects specified in the question. Draw a point to show the price and quantity when the monopoly is regulated in the social interest. Label it 1. Draw a point on the ATC curve that shows the average total cost when the firm is regulated in the social interest. Label it 2. Draw a shape that shows the firm's economic loss. Label it Loss.arrow_forwardQuestion 4: Monopoly graph: Draw a monopoly market experiencing a profit. Show MR, MC, D, ATC an AVC and show the profit area.arrow_forwardMC - ATC 30- D 300 1200 Unita of output, Q Label A Label B Label C MC = ATC 30- D Dollars ($) Dollars ($)arrow_forward
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- QUESTION 3 You are considering subscribing to ESPN+. You are willing to pay up to $83 per year for a subscription. The current annual price is $26. Calculate your consumer surplus under these circumstances. QUESTION 4 180 168 156 144 132 120 108 96 84 72 60 48 36 24 12 0 0 45 90 135 180 225 270 315 360 405 450 495 540 585 630 675 Quantity P -MR---MC=AC A monopoly face the following demand, marginal revenue and marginal cost functions Note that in this case MC(Q)= AC(Q) for all Q. Calculate the monopoly's profits if the monopoly charges the single profit maximizing price O 18,550 O 19,440 O 19,100 O 14,500arrow_forwardA monopoly market is characterized by the profit maximizer, price maker, high barriers to entry, single seller, and price discrimination. The information on the table below is a typical monopoly firm. Use it to answer the questions that follow Output Price Total Cost 0 $100 $200 1 100 290 2 100 350 3 100 390 4 100 470 5 100 560 6 100 700 7 100 900 i. What is the profit maximizing or loss minimizing quantity of output of this firm to produce? Why? ii. What is the profit or loss at the profit maximizing or loss minimizing output level? iii. Should the firm shut down or remain in operation? Why? iv. Assuming this is a representative firm in the industry or market, given the profits or losses incurred, what can be expected to happen over time in the market?arrow_forward← Tennessee Natural Gas is a natural monopoly The graph shows the demand curve, the marginal revenue curve, the marginal cost curve and the average total cost curve for the firm. Price and cost (cents per cubic foot) 110- 100- 90- 50- 70- 60- 50- 40- 30- 20- 10- SMRT HA ATC MC Q odu Qarrow_forward
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