Note: Answer should be in typed words... I have posted this question again because someone here before gave the wrong and unreadable answer. So, I request that person to don't give the answer now. I am putting his answer here which is wrong. quilibruim is whereat thin poing) .a she quantity which monopoly praduce atMR MC. * are mawimizedThe quantity produerd at thês poñnt o QsO Allo cating the d3 ou the demand curuo me niell get thepricethe price io P3 at Bs lenel3price level LP3) buteutfuthe A TCat Q3 is loemer than theabone the tenel t).at Q3 lenel 2 putjut the prie (P3) n greaterthere areThere areprofitathata ATC. hence,at &3 lenelat that linel[ TR= P3 x Q3T[TC = ATC 1 Q2)P3xQ3 -AT (Q3)(3-A TO Q大20as P3 > ATCc@. The monopoly sshut downmaking propet and nence it chould not 2. Consider the graph below, which indicates the demand and cost structures of amonopolist firm and answer the questions that follow.Figure 2MCАТСP3P4DQ3 Q Q2 QuantityMRa) What quantity will this monopolist produce at equilibrium?b) At what price is this monopolist selling the product?c) What is the average total cost of selling the product?d) What is the profit or loss per unit?e) In your opinion, should this monopolist shut down? Motivate your answer.Dollars

2. Consider the graph below, which indicates the demand and cost structures of a monopolist firm and answer the questions that follow. Figure 2 MC ATC P3 P1 P2 P4 Q3 Q\ Q2 Quantity MR a) What quantity will this monopolist produce at equilibrium? b) At what price is this monopolist selling the product? c) What is the average total cost of selling the product? Dollars

2. Consider the graph below, which indicates the demand and cost structures of a monopolist firm and answer the questions that follow. Figure 2 MC ATC P3 P1 P2 P4 Q3 Q\ Q2 Quantity MR a) What quantity will this monopolist produce at equilibrium? b) At what price is this monopolist selling the product? c) What is the average total cost of selling the product? Dollars

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter11: Monopoly And Antitrust Policy

Section: Chapter Questions

Problem 7SCQ: From the graph you drew to answer Exercise 11.6, would you say this transit system is a natural...

See similar textbooks

Similar questions

Some years ago. two intercity bus companies, Greyhound Lines, Inc. and Trailways Transportation System, wanted to merge. One possible definition of the market for this case was the market for intercity bus service. Another possible definition was the market for intercity transportation, including personal cars, car rentals, passenger trains, and commuter air flights.' Which definition do you think the bus companies preferred, and why?
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?
Imagine 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?
Classify the following as a government-enforced barrier to entry, a banker to entry that is not government enforced, or a situation that does not involve a barrier to entry. A City passes a law on how many licenses it will issue for taxicabs A city passes a law that all taxicab drivers must pass a driving safety test and have insurance A well-known trademark Owning a spring that offers very pure water An industry where economies of scale are very large compared to the size of demand in the market
Why are urban areas willing to subsidize urban transit systems? Does the argument for subsidies make sense to you?
Suppose that an inventor discovers a new chemical compound that can change the color of people’seyes with no negative side effects. Since she holdsa patent on this chemical, she has a monopoly overthe sale of the new eye-color treatment. However,she’s an inventor, not a businessperson. Explain toher how she should set the price for the eye-colortreatment in order to maximize her profits.
Many schemes for price discrintination involve somecosL For example, discount coupons take up the timeand resources of both the buyer and the seller. Thisquestion considers the implications of costly pricediscrimination. To keep things simple, let's assumethat our monopolist's production costs arc simplyproportional to output so that average total cost andmarginal cost arc constant and equal to each other.CHAPTER 15 MONOPOLY 317a. Draw the cost., demand, and marginal-revenuecurves for the monopolist. Show the pricethe monopolist would charge without pricediscrimination.b. ln your diagram, mark the area equal to the mernopolist's prolit and call it X. Mark the area equalto consumer surplus and call it Y. Mark the areaequal to the deadweight loss and call it Z.c. Now suppose that the monopolist can perfectlyprice discriminate. What is the monopolist'sprofit? (Give your answer in terms of X, Y, and Z.)d. What is the change in the monopolist's prolit fromprice discrimination? What is the…
A computer store sells WP and SS. Given below are themaximum amounts two consumers will pay for these goods and for a bundle that contains bothgoods. WP SS Bundle carolina $100 $90 $190 shawn $90 $40 $130 (a) What is the firm’s revenue if it sells the WP at a price of $90 and the SSat a price of $90? The goods are only available individually and not as a bundle. Please showyour calculations.(b) Will the firm charge $130 or $190 for the bundle if it wants to earn maximum revenue?Assume that the goods are only sold as a bundle and not available separately. Please explain.(c) Will selling individually or selling a bundle result in higher revenues?
I. Under monopoly pricing, are profits positive, negative or zeroii. If government regulates average total cost pricing are profits positive, negative or zero?
Many schemes for price discrimination involvesome cost. For example, discount coupons take upthe time and resources of both the buyer and theseller. This question considers the implications ofcostly price discrimination. To keep things simple,let’s assume that our monopolist’s production costsare simply proportional to output so that averagetotal cost and marginal cost are constant and equalto each other.a. Draw the cost, demand, and marginal-revenuecurves for the monopolist. Show the pricethe monopolist would charge without pricediscrimination.b. In your diagram, mark the area equal to themonopolist’s profit and call it X. Mark thearea equal to consumer surplus and call it Y.Mark the area equal to the deadweight loss andcall it Z.c. Now suppose that the monopolist can perfectlyprice discriminate. What is the monopolist’sprofit? (Give your answer in terms of X, Y,and Z.)d. What is the change in the monopolist’s profit fromprice discrimination? What is the change in totalsurplus from…
Consider the relationship between monopoly pricingand price elasticity of demand.a. Explain \\•hy a monopolist will never produce aquantity a t which the demand curve is inelastic.(Hint: If demand is inelastic and the firm raisesits price, what happens to total revenue and totalcosts?)b. Draw a diagram for a monopolist,. preciselylabeling the portion of the demand curve thatis inelastic. (Hint: The answer is related to themarginal-revenue curve.)c. On your diagram, show the quantity and pricethat maximize total revenue.
(Monopoly) Suppose that a certain manufacturer has amonopoly on the sorority and fraternity ring business(a constant-cost industry) because it has persuaded the“Greeks” to give it exclusive rights to their insignia.a. Using demand and cost curves, draw a diagram depictingthe firm’s profit-maximizing price and output level.b. Why is marginal revenue less than the price for this firm?c. on your diagram, show the deadweight loss that occursbecause the output level is determined by a monopolyrather than by a competitive market.d. What would happen to price and output if the Greeksdecided to charge the manufacturer a royalty fee of$3 per ring?