Principles Of Economics 2e
2nd Edition
ISBN: 9781680920864
Author: Timothy Taylor, Steven A. Greenlaw, David Shapiro
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Textbook Question
Chapter 9, Problem 33P
Draw a monopolist’s
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?
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Create graph that includes:
Demand curve, marginal cost, and marginal revenue.
Identify the profit-maximizing quantity and price for this monopolist. To do this you will need to determine marginal revenue at each level of output. Choose output that satisfies the monopolist’s profit maximizing condition of MR = MC.
Does this firm earn a profit? How much profit if they do?
The following graph shows the demand, marginal revenue, and marginal cost curves for a single-price monopolist that produces a drug that helps
releve arthritis pain.
Place the grey point (star symbol) in the appropriate location on the graph to Indicate the monopoly outcome such that the dashed lines reveal the
profit-maximizing price and quantity of a single-price monopolst. Then, use the green rectangle (triangle symbols) to show the profits earned by the
monopolist.
10
Manapaly Outcome
Manapaly Profits
4
MC = ATC
1.
MR
Damand
3 4
QUANTITY (Millians of dasas par yaar)
5
6
10
1
2
6
8
Suppose that should the patent on this particular drug explre, the market would become perfectly competitive, with new firms Immedlately enterling
the market with essentially Identical products.
Further suppose that In this case the original firm will hire lobbylsts and make donations to several key politicians to extend Its patent for one more
year. The firm Is prepared to spend up to $
million to extend…
How much is total surplus if the market is perfectly competitive?How much is total surplus if the market is controlled by a single price monopolist?Suppose the single price monopolist started charging all customers the maximum price they are willing to pay. How much additional surplus is created?
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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