Economics (MindTap Course List)
13th Edition
ISBN: 9781337617383
Author: Roger A. Arnold
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Question
Chapter 23, Problem 6QP
To determine
The condition in which
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
The figure shows the market demand curve for penicillin, an antibiotic medicine. Initially, the
market was supplied by perfectly competitive firms. Later, the government granted the exclusive
right to produce and sell penicillin to one firm. The figure also shows the marginal revenue curve
(MR) of the firm once it begins to operate as a monopoly. The marginal cost is constant at $3.
irrespective of the market structure.
After the market changes from perfect competition to a monopoly..
OA. social surplus decreases
OB. consumer surplus increases.
OC. deadweight loss decreases
OD. the market price decreases
-COD-
Price/Cost (5)
10
9
10
20
30
MR
40 60 00
Demand
70
BO
so Quanety
(units)
We’ve observed that there are few examples of perfectly competitive markets in the real world, yet we use the model of perfect competition as a comparison with other market structures. Can you think of any examples of monopoly in the real world?Describe something you believe could possibly called a monopoly and explain why it fits the characteristics of a monopoly.
Is your example a true, unregulated monopoly? (For example, Microsoft has been called a monopoly, but it is not the sole producer of computer operating systems, so strictly speaking it’s not a monopoly.)
If there are few true monopolies, what can we learn from studying that market structure?
Currently, the apple business is very competitive. However, suppose that the Koch Brothers buy up all the apple farms, turning the apple business in to a monopoly. What is the most likely impact?
Chapter 23 Solutions
Economics (MindTap Course List)
Ch. 23.1 - Prob. 1STCh. 23.1 - Prob. 2STCh. 23.1 - Prob. 3STCh. 23.3 - Prob. 1STCh. 23.3 - Prob. 2STCh. 23.3 - Prob. 3STCh. 23.3 - Prob. 4STCh. 23.5 - Prob. 1STCh. 23.5 - Prob. 2STCh. 23.5 - Prob. 3ST
Ch. 23 - Prob. 1QPCh. 23 - Prob. 2QPCh. 23 - Prob. 3QPCh. 23 - Is there a deadweight loss if a firm produces the...Ch. 23 - Prob. 5QPCh. 23 - Prob. 6QPCh. 23 - Prob. 7QPCh. 23 - Prob. 8QPCh. 23 - Prob. 9QPCh. 23 - Prob. 10QPCh. 23 - Prob. 11QPCh. 23 - Prob. 12QPCh. 23 - Prob. 13QPCh. 23 - Prob. 14QPCh. 23 - Prob. 1WNGCh. 23 - Prob. 2WNGCh. 23 - Prob. 3WNGCh. 23 - Prob. 4WNGCh. 23 - Prob. 5WNGCh. 23 - Prob. 6WNG
Knowledge Booster
Similar questions
- Comparing a perfectly competitive market to a monopoly, which of the following is true? Group of answer choices Price will be higher than marginal cost in the perfectly competitive market but will beequal to marginal cost in the monopoly. Price will be equal to marginal revenue in the perfectly competitive market but will behigher than marginal revenue in the monopoly. at that point on the market demand curve which intersects the marginal cost curve. Price will be higher and quantity will be lower in the perfectly competitive market than inthe monopoly.arrow_forwardA firm faces a market demand curve given by: P = 100 - Q. Assume that the firm has a total cost given by: TC = Q2 - 60Q + 1,000. What are the price quantity combination that maximizes profit? Calculate the following in case of Perfect Monopoly and Perfect Competition? compare your results? a. What output level should the firm produce to maximize profit? b. What is the profit maximization price (P) for this firm? c. What is the firm's profit? d. What is the Consumer Surplus?arrow_forwardThe MR curve of a perfectly competitive firm is (Click to select) and the MR curve of a monopoly firm is (Click to select)arrow_forward
- Explain in stepsarrow_forwardSuppose that the demand curve for a good is P = 100 – 2Q. The marginal cost curve of a firm in the industry is given by MC = 3Q. Calculate and compare the equilibrium price and quantity under monopoly and perfect competition.arrow_forwardSuppose a perfectly competitive industry can produce a product with total cost TC = Q? and the market demand for the product is given by Q = 120 - Suppose that the same market can be served by a monopolist operates with the same cost and demand functions. How does the consumer surplus change due to monopoly relative to perfect competition? It falls by 2000 It does not change It falls by 1600 It falls by 1200arrow_forward
- You have been granted a monopoly in the avocado market. The market demand for avocados is Q = 2000 – 2P. Your cost structure is such that your total costs are TC = 1000+ 400Q. (limit: whatever needed) What is your profit maximizing price and quantity? Explain this in words and show it graphically. What are the profit, producer surplus and consumer surplus? The government is thinking about breaking your monopoly into ten identical firms and giving ownership to 10 random people. Correspondingly, each firm would have a fixed cost of $1000 and a marginal production cost of $400 per unit. In this perfectly competitive environment, what would be the equilibrium price and quantity? Explain this in words and show it graphically. What are the profit per firm, producer surplus and consumer surplus that correspond to your answer to part d)? How much would you be willing to pay to keep the government from taking your monopoly away? Explain.arrow_forwardThe government is contemplating regulating the monopoly and forcing it to operate at the competitive solution. Please indicate graphically the resulting welfare gains to society (hint: the gains are equal to the deadweight loss of a monopoly). Explain your response briefly.arrow_forwardThe figure shows the market demand curve for penicillin, an antibiotic medicine. Initially, the market was supplied by perfectly competitive firms Later, the government granted the exclusive right to produce and sell penicillin to one firm. The figure also shows the marginal revenue curve (MR) of the firm once it begins to operate as a monopoly. The marginal cost is constant at $3, irrespective of the market structure What is the surplus enjoyed by the firm when it is the sole supplier of the medicine? OA. 590 OB. $180 OC. $30 OD. $60 Price/Cost (5) 10 1 10 20 30 40 MR Demand 50 60 70 80 90 Quantity (units)arrow_forward
- Suppose the long-run marginal cost for a firm is given by MC= x^2 - 2x+5 , where x is the quantity supplied by the firm. Demand for the industry’s product is given by Q= 200-2p, where Q is quantity demanded and p is price. Consider two possibilities: (1) The industry is perfectly competitive ,or (2) the industry is an unnatural monopoly that operates at a single price. (a) What will the amounts of firm and industry output (x, Q) be under each form of industrial organization? (b) How much would a firm be willing to pay to obtain the right to act as a monopoly in this industry? Please show your work. (c) What is the dollar amount of deadweight loss from the monopoly? Please show work for each part.arrow_forwardShow in stepsarrow_forwardCompare and contrast the decision-making processes of a competitive firm versus a monopoly firm.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning