Bundle: Microeconomic Theory: Basic Principles and Extensions, 12th + MindTap Economics, 1 term (6 months) Printed Access Card
12th Edition
ISBN: 9781337198202
Author: NICHOLSON, Walter, Snyder, Christopher M.
Publisher: Cengage Learning
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Textbook Question
Chapter 17, Problem 17.10P
Wonopoly and natural resource prices
Suppose that a firm is the sole owner of a stock of a natural resource.
a. How should the analysis of the maximization of the discounted profits from selling this resource (Equation 17.63 be modified to take this fact into account?
b. Suppose that the demand for the resource in question had a constant elasticity form
c. How would the answer to Problem 17.7 be changed if the entire crude oil supply were owned by a single firm?
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Use the following table to work Problems 5 to 9.
Minnie's Mineral Springs, a single-price monopoly,
faces the market demand schedule:
Price
Quantity demanded
(dollars per bottle)
10
8
(bottles per hour)
0
1
6
2
4
3
2
4
0
5
5. a. Calculate Minnie's total revenue schedule.
b. Calculate its marginal revenue schedule.
6. a. Draw a graph of the market demand curve
and Minnie's marginal revenue curve.
b. Why is Minnie's marginal revenue less than
the price?
7. a. At what price is Minnie's total revenue maxi-
mized?
b. Over what range of prices is the demand for
water from Minnie's Mineral Springs elastic?
8. Why will Minnie not produce a quantity at which
the market demand for water is inelastic?
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Chapter 17 Solutions
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