Micro Economics For Today
10th Edition
ISBN: 9781337613064
Author: Tucker, Irvin B.
Publisher: Cengage,
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Chapter P3, Problem 6KC
To determine
The market condition of profit of the monopolist.
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Key Idea: A monopolist sets MR = MC in order to maximize profit in the short run.
Explain why the monopolist’s demand and marginal revenue curves are not the same.
Graphically show a monopolist’s short-run profit-maximizing price and quantity.
Explain what determines whether a firm is a price taker or a price searcher.
Microeconomics, 13th Edition
Chapter 10 Monopoly
(KEY QUESTION) Bob is a magazine monopolist. His marginal cost of production (per magazine) is constant
at $5. His demand information is as follows:
Price ($)
QD
50
40
30
10
20
20
15
30
10
50
5
102
2.50
200
a. Calculate the total revenue for Bob at each price.
b. Calculate the (approximate) marginal revenue for Bob at each price.
c. What is Bob's profit-maximising output level and price? Compare this with the perfectly competitive
equilibrium level of output and price.
d. (REAL-WORLD APPLICATION) Go to this useful graphics: www.scores.org/graphics/monopoly, and
offer YOUR OWN views on the following questions: Is Google a monopoly? Should governments
regulate Google? If so, how? (vou can use some other online resources to form vour views)
Market Structure Number of Firms Type of Product Sold Price Taker? Price Formula Freedom of Entry? Short-run Profit? Long-run Profit? Industry ExamplesPerfect Competition ManyDifferentiated or IdenticalYesP<MCYesNoYes[Insert two to three example industries that meet the criteria of the market structure.]Monopolistic Competition[Insert two to three example industries that meet the criteria of the market structure.]Monopolies [Insert two to three example industries that meet the criteria of the market structure.]Oligopolies[Insert two to three example industries that meet the criteria of the market structure.]
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Similar questions
- Question 12 Higher barriers to entry and exit are generally associated with lower profits higher profits lower advertising higher advertisingarrow_forward15. In monopolistic competition. (a) there is no entry and exit. (b) each firm produces slightly differentiated product. (e) each firm is a price taker. (d) there are few firms in the market. (e) each firm observes a horizontal demand curve.arrow_forwardK3 Please correct answerarrow_forward
- Problem 1. (Monopoly and Efficiency) A monopolist faces a market demand Q = 30- P, where P is the market price, and has a cost function TC = }Q², where Q is the quantity monopolist produces. (a) Find the profit maximizing price and quantity. Calculate the resulting consumer surplus (CS), producer surplus (PS) and the deadweight loss (DWL). (b) Suppose that the government puts a price ceiling at p 18. How much output will the monopolist produce? Calculate the resulting CS, PS, and DW L. Why is DWL different now? (c) Suppose that the government puts a price ceiling on the monopolist in order to maximize the total surplus (CS+ PS). What price ceiling should it choose? How much output will the monopolist produce at this price ceiling? Calculate resulting CS, PS, and DW L. Is this the socially optimal outcome?arrow_forward(Short-Run Profit Maximization) Answer the following questions on the basis of the monopolist's situation illustrated in the following graph. a. At what output rate and price does the monopolist operate? b. In equilibrium, approximately what is the firm's total cost and total revenue? c. What is the firm's economic profit or loss in equilibrium?arrow_forwardMCQ question & only typed Answerarrow_forward
- i A monopoly can be identified by a few traits that distinguish it from other market systems. Identify the reasons a monopoly firm sets prices in microeconomics. ii. Monopolistic opponents said that the monopoly power would have a negative social impact. Tell us why. iii Describe THREE (3) qualities or conditions of the perfectly Competitive market structure. A perfectly competitive market has the opposite characteristics or conditions from a monopolistic market.arrow_forwardAssignment 9 Question 1 A monopolistic producer of two goods, G, and G2, has a joint total cost function TC = 5Q1 + Q1Q2 +5Q2 Where Q1 and Q2 denote the quantities of G1 and G2 respectively. If P, and P2 denote the corresponding prices then the demand equations are P1 = 40 – Q1 + Q2 Ра 3 20 + 2Q1- Q2 a) Find the total revenue function for each good b) Find the profit function for the firm c) Find the maximum profit if the firm is contracted to produce a total of 12 goods of either type d) Find the price that the firm is supposed to charge for each good. e) Estimate the new optimal profit if the production quota increases to 15 unitarrow_forwardquestion a,b,carrow_forward
- Question 4 A monopoly can be recognized by certain characteristics that set it aside from the other market structures. Explain why a monopoly firm is a price-maker in i. microeconomics. The opponent of monopoly argued that the monopoly power will result to a social cost. Explain why. i. A perfectly competitive market has the opposite characteristics or conditions from the monopoly market, describe THREE (3) characteristics or conditions of the perfectly Competitive market structure. iii.arrow_forwardP (S) 80 50 0 36 48 MR Reference: Ref-Figure: Primary Market of Tickets MC (Figure: Primary Market of Tickets) Look at the figure Primary Market of Tickets. The figure shows the demand, marginal revenue and marginal cost curves of a A) 48,000. B) 0. monopolist. If instead of behaving as a monopolist, the seller behaves as a perfect competitor, the number of tickets sold would be: Q (thousands) C) 12,000. D) 36,000.arrow_forward(a) State the main features of monopoly and name any one organization which operates under monopoly. (b) Briefly explain the ‘monopolist’s equilibrium’ in short-run with the help of a schedule. (c) Determine the equilibrium of firm under monopolistic competition in long runarrow_forward
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