Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 9, Problem 19RQ
What is the usual shape of a marginal revenue cuwe for a monopolist? Why?
Expert Solution & Answer
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Students have asked these similar questions
when monopolist faces a downward slope demand curve it can increase its revenue by?
A student argues, "it a monopolist finds a way of producing a good at lower cost, he will not
lower his price. Because he is a monopolist, he will keep the price and the quantity the same
and just increase his profit." Do you agree?
Use the line drawing tool to graph a new marginal cost ourve reflecting the lower cost of
production. Label this Ine MC,
MC,
Carefully follow the instructions above, and only draw the required objects.
According to your graph, when producing at lower cost, the proft-maximizing price is
unchanged
lower
MR
higher
Quantity
unchanged
Price and cost
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WMonop HW X
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The quantity has been found for you by finding where MC-MR. The monopolist sets price by charging
as high as demand will bear at that quantity. So once the quantity has been found, go upon the dotted
is the price. Total
Revenue is PxQ, Total costs are found by finding the average cost and multiplving by O.
ATC
AVC
100
100
MR
What is the optimal quantity?
What is the price?
What is Total Revenue?
What is Total Cost?
What is Total Variable Cost?
What is Total Fixed Cost? [Hint: Average fixed cost is the vertical distance between the ATC and AVC
curves at the optimal Q.]
Is there a profit or a loss? How much?
8
11:02
Chapter 9 Solutions
Principles of Economics 2e
Ch. 9 - Classify the following as a government-enforced...Ch. 9 - Classify the following as a government-enforced...Ch. 9 - Suppose the local electrical utility, a legal...Ch. 9 - If Congress reduced the period of patent...Ch. 9 - Suppose demand for a monopolys product falls 50...Ch. 9 - Imagine a monopolist could charge a different...Ch. 9 - How is monopoly different from perfect...Ch. 9 - What is a barrier to entry? Give some examples.Ch. 9 - What is a natural monopoly?Ch. 9 - What is a legal monopoly?
Ch. 9 - What is predatory pricing?Ch. 9 - How is intellectual property different from other...Ch. 9 - What legal mechanisms protect intellectual...Ch. 9 - In what sense is a natural monopoly natural?Ch. 9 - How is the demand curve perceived by a perfectly...Ch. 9 - How does the demand curve perceived by a...Ch. 9 - Is a monopolist a price taker? Explain briefly.Ch. 9 - What is the usual shape of a total revenue curve...Ch. 9 - What is the usual shape of a marginal revenue cuwe...Ch. 9 - How can a monopolist identify the...Ch. 9 - How can a monopolist identify the...Ch. 9 - When a monopolist identifies its profit-maximizing...Ch. 9 - Is a monopolist allocatively efficient? Why or why...Ch. 9 - How does the quantity produced and price charged...Ch. 9 - ALCOA does not have the monopoly power it once...Ch. 9 - Why are generic pharmaceuticals significantly...Ch. 9 - For many years, the Justice Department has tried...Ch. 9 - Intellectual property laws are intended to promote...Ch. 9 - Imagine that you ale managing a small firm and...Ch. 9 - If a monopoly firm is earning profits, how much...Ch. 9 - Return to Figure 9.2. Suppose P0 is 10 and P1 is...Ch. 9 - Draw the demand curve, marginal revenue, and...Ch. 9 - Draw a monopolists demand curve, marginal revenue,...
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Similar questions
- How does the quantity produced and price charged by a monopolist compare to that of a perfectly competitive film?arrow_forwardImagine a monopolist could charge a different price to every customer based on how much he or she were willing to pay. How would this affect monopoly profits?arrow_forwardIs a monopolist a price taker? Explain briefly.arrow_forward
- Draw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the monopolists profit-maximizing output level. Now, think about a slightly higher level of output (sayQ0+1). According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?arrow_forwardHow can a monopolist identify the profit-maximizing level of output if it knows its total revenue and total cost curves?arrow_forwardIs a monopolistically competitive firm productively efficient? Is it allocatively efficient? Why or why not?arrow_forward
- Why are urban areas willing to subsidize urban transit systems? Does the argument for subsidies make sense to you?arrow_forwardIf a monopoly firm is earning profits, how much would you expect these profits to be diminished by entry in the long run?arrow_forwardWhen a monopolist identifies its profit-maximizing quantity of output, how does it decide what price to charge?arrow_forward
- In the middle of the twentieth century, major U.S. cities had multiple competing city bus companies. Today, there is usually only one and it runs as a subsidized, regulated monopoly. What do you suppose caused the change?arrow_forwardFrom the graph you drew to answer Exercise 11.6, would you say this transit system is a natural monopoly? Justify. Use the following information to answer the next three questions. In the years before wireless phones, when telephone technology requited having a wile matting to every home, it seemed plausible that telephone service had diminishing average costs and might require regulation like a natural monopoly. For most of the twentieth century, the national U.S. phone company was AT&T, and the company functioned as a regulated monopoly. Think about the deregulation of the U.S. telecommunications industry that has occurred over the last few decades. (This is not a research assignment, but a thought assignment based on what you have learned in this chapter.)arrow_forwardHow does the demand curve perceived by a monopolist compare with the market demand curve?arrow_forward
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