Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Question
Chapter 9, Problem 4SQP
(a)
To determine
Explain the reason for agreeing or disagreeing with the given statement.
(b)
To determine
Explain the reason for agreeing or disagreeing with the given statement.
(c)
To determine
Explain the reason for agreeing or disagreeing with the given statement.
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Students have asked these similar questions
explain why you agree or disagree with the following statements:
a. "all monopolies are created by the government"
b "the monopolist charges the highest possible price"
c. "the monopolist never take a loss"
1. Explain how a monopolist chooses the quantity of output to produce and the price to
change.
2. Why is a monopolist's marginal revenue less than the price of its good? Can marginal
revenue ever be negative? Explain.
3. Describe the ways policymakers can respond to the inefficiencies caused by
monopolies. List a potential problem with each of these policy responses.
a. Draw the cost curves for a typical firm. Explain how a competitive firm chooses the level of output that maximizes profit. At that level of output, show on your graph the firm’s total revenue and total cost.
b. Draw the demand curve, marginal revenue curve, average total cost curve, and marginal-cost curve for a monopolist. Show the profit-maximizing level of output, the profit-maximizing price, and the amount of profit.
c. Why the demand curve for a firm operating in monopolistic competition is more elastic compared to the firm operating as a monopoly.
Kindly answer all the sub parts.
Chapter 9 Solutions
Micro Economics For Today
Ch. 9.1 - Prob. 1GECh. 9.1 - Prob. 2GECh. 9.2 - Prob. 1YTECh. 9.4 - Prob. 1YTECh. 9 - Prob. 1SQPCh. 9 - Prob. 2SQPCh. 9 - Prob. 3SQPCh. 9 - Prob. 4SQPCh. 9 - Prob. 5SQPCh. 9 - Prob. 6SQP
Ch. 9 - Prob. 7SQPCh. 9 - Prob. 8SQPCh. 9 - Prob. 9SQPCh. 9 - Prob. 10SQPCh. 9 - Prob. 11SQPCh. 9 - Prob. 12SQPCh. 9 - Prob. 13SQPCh. 9 - Prob. 1SQCh. 9 - Prob. 2SQCh. 9 - Prob. 3SQCh. 9 - Prob. 4SQCh. 9 - Prob. 5SQCh. 9 - Prob. 6SQCh. 9 - Prob. 7SQCh. 9 - Prob. 8SQCh. 9 - Prob. 9SQCh. 9 - Prob. 10SQCh. 9 - Prob. 11SQCh. 9 - Prob. 12SQCh. 9 - Prob. 13SQCh. 9 - Prob. 14SQCh. 9 - Prob. 15SQCh. 9 - Prob. 16SQCh. 9 - Prob. 17SQCh. 9 - Prob. 18SQCh. 9 - Prob. 19SQCh. 9 - Prob. 20SQ
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Similar questions
- When the market for a good is efficient, the good’s price is $14. When the market is controlled by a monopoly, the good’s price is $18. What is a possible value for the price of the good if there are two competing oligopolists in the market? A. $14 B. $18 C. $16 D. $19 E. $13 _______arrow_forwardSuppose that a monopolist can segregate his buyers into two different groups to which he can charge two different prices. In order to maximize profit, the monopolist should charge a higher price to the group that has a. The higher elasticity of demand. b. The lower elasticity of demand. c. Richer members.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_forward
- a. Why is a monopolist’s marginal revenue less than the price of its good? Can marginal revenue ever be negative? Explain. b. Draw the demand, marginal-revenue, average total-cost, and marginal-cost curves for a monopolist. Show the profit-maximizing level of output, the profit-maximizing price, and the amount of profit. c. Describe the two problems that arise when regulators tell a natural monopoly that it must set a price equal to marginal cost.arrow_forwardWhich two kinds of monopolies exist? Which is more economically efficient? Why?arrow_forwardMonopoly 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_forward
- When does a company officially become a monopoly? a. when it controls more than 25 percent of the output of a certain product b. when the government decides the company is a threat to the national economy c. when a company controls the output for a marketable product without meaningful competition d. when a company controls more than 50 percent of the output of a productarrow_forwardIs a monopoly always bad for society? a. No. For example, patents on medications create monopolies, and increase the price and reduce the quantity sold, but without them, no one would take the high costs of developing new drugs and the quantity will be... zero! b.Monopoly is not bad if its owner gives back to society in charity. c.Yes, Monopoly is always bad d. None of the other answers is correctarrow_forwardIdentify a monopoly that you have recently consumed. Explain why you selected it as a monopoly and make sure to relate your example to the market characteristics. Why do you think monopolies are classified as a price maker and what are the challenges that monopolies will be facing given the lack of competition?arrow_forward
- (4) Use Figure Four on page 10 to answer (4). In the long run: a)what is the monopolist’s output? _______________________ b) what is the monopolist’s price? _________________________ c) is the monopolist technologically efficient? If so, why? If not, what is the monopolist’s technologically efficient output level?arrow_forward1. Using a graph, show a situation in which a monopolist is incurring short-run losses. Explain how this is possible. 2. Julee has estimated the demand and marginal revenue for her product. They are P = 100 - 2Q (quantity) and MR = 100 - 4Q, respectively. She also experiences constant marginal cost of $16. a. Does Julee have any market power? How can you tell? b. What is Julee’s profit-maximizing quantity? c. What price should Julee charge at that profit-maximizing quantity? 3. Explain a situation in which, when holding costs constant, a monopolist that was earning economic profits in the past can later incur an economic loss.arrow_forward2. A monopolist faces demand p = 10 - Q and has costs TC = 10 + 2q. a. Provide expressions for marginal revenue and marginal cost. b. Maximize the firm's profit to determine the equilibrium price, quantity, and profit. c. The monopolist faces the prospect of entry by competitor with the same cost function. If the firm enters, they will compete by choosing quantities. Does the monopolist need to worry about this entry threat? Explain. d. The government is considering a subsidy of 4 for all firms in this industry. Should the monopolist support or oppose this policy? Explain.arrow_forward
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