MANAGERIAL ECONOMICS
5th Edition
ISBN: 9781337106658
Author: FROEB
Publisher: CENGAGE L
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Chapter 23, Problem 4MC
To determine
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The accompanying diagram depicts a monopolist whose price is regulated at $10 per unit. Use this figure to answer the questions that follow. a. What price will an unregulated monopoly charge? b. What quantity will an unregulated monopoly produce? c. How many units will a monopoly produce when the regulated price is $10 per unit? d. Determine the quantity demanded and the amount produced at the regulated price of $10 per unit. Is there a shortage or a surplus? e. Determine the deadweight loss to society (if any) when the regulated price is $10 per unit. f. Determine the regulated price that maximizes social welfare. Is there a shortage or a surplus at this price?
Gaynor is the only manufacturer of gas pumps that automatically refill. Gaynor can earn a profit on the sale of these gas pumps
a. in the short run but not in the long run because new firms will enter the industry in the long run.
b. in the long run but not the short run because the monopolist will face competition in the short run.
c. only in the long run because government regulations prevent monopolists from earning profits in the short run.
d. in the long and short run because entry into the industry by new firms is blocked.
What Is Overcoming the Barriers to Supplier Development?
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- Gaynor is the only manufacturer of gas pumps that automatically refill. Gaynor can earn a profit on the sale of these gas pumps a.in the long run but not the short run because the monopolist will face competition in the short run. b.in the long and short run because entry into the industry by new firms is blocked. c.only in the long run because government regulations prevent monopolists from earning profits in the short run. d.in the short run but not in the long run because new firms will enter the industry in the long run.arrow_forwardThe MC for the Hydration Power Drink is $1.00. The MC for the smoothie is $4.00.Using the chart and the information provided, what is the contribution margin at each price for each product? Hydration High Price contribution margin is Hydration Low Price contribution margin is Smoothie High Price contribution margin is Smoothie Low Price contribution margin isarrow_forwardAre all markets regulated or deregulated?arrow_forward
- Match each of the terms to their description: Shutdown Point A. something that keeps new firms from joining a market B. legal protection for inventions C. legal protection for books and music D. a firm that operates as a monopolist Price maker Barriers to Entry Copyright E. revenues do not cover its average variable costs Patentarrow_forwardVertical relationships can increase profits through a. preventing firms from evading regulation b. eliminating a double-markup problem c. making the incentives of manufacturers and retailers unaligned d. preventing price discriminationarrow_forwardWhat would happen to the following if there is anincrease in marginal cost? (a) The price that the monopolist can charge. (b) The quantity that the monopolist will produce. (c) The quantity that the perfectly competitive industry will produce. (d) The maximum profit of the perfectly competitive industry. .arrow_forward
- You live in a town with 300 Adults and 200 children, and you arc thinking about putting on a play to entertain your neighbors and make some money. A play has a fixed cost of $2,000, but selling an extra ticket has zero marginal cost. Here are the demand schedules for your two types of customer: a. To maximize profit, what price would you charge for an adult ticket? For a child's ticket?How much profit do you make?b. The city council passes a law prohibiting you from charging different prices to different customers. What price do you set for a ticket now? How much profit do you make?c. Who is worse off because of the law prohibiting price discrimination? Who is better off? (If you can, quantify the changes in welfare.)d. If the fixed cost of the play were $2,500 rather than $2,000, how would your answers to parts (a), (b), and (c) change?arrow_forwardWhich of the following statements is false? Select one: a. Ceteris paribus, a monopolist charges the same price as a perfect competitor. b. All of the other statements are false. c. The monopolist never takes a loss. d. All monopolies are created by the government.arrow_forwarda. b. If a firm's the price elasticity of demand (Eg) to be-3.5 and marginal cost (MC) is $15. Using the mark-up rule, what is the optimal price for the firm to charge? If the price elasticity of demand (En) changes to -3.0, and MC is still $15. Use the mark-up rule to find the new optimal price for the firm to charge? What is the defining feature of a Pure Selling Problem and what impact does it have one the firm's goal to maximize profit?arrow_forward
- Monopoly The graph below illustrates a monopolist's demand, MR, and cost curves. a. What quantity will the monopoly produce and what price will the monopoly charge? What will its profits be? b. Suppose the monopoly is regulated. If the regulatory wants to achieve economic efficiency, what price should it require the monopoly to charge? How much output will the monopoly produce at this price? What will its profits be? Price and cost (per necklace) 260.00 240.00 220.00 200.00 180.00 160.00 140.00 120.00 100.00- 80.00 60.00 40.00 20.00- 0.00+ 0 MC ATC MR D 8 10 12 14 16 18 20 22 24 26 Quantity (diamond necklaces)arrow_forwardmicroeconomicsarrow_forwardWhat Is Supplier-Specific Barriers?arrow_forward
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