5. The following graph shows demand and MR for a monopoly: 20 15 10 5 MR D 0 200 400 600 Quantity a. If the firm wants to sell 200 units, what price does it charge? b. If the firm charges a price of $15, how much will it sell? What is MR for parts a and b? Is demand elastic or inelastic? c. d. If the firm charges $10, how much will it sell? What is demand elasticity? Price dollars) 800

5. The following graph shows demand and MR for a monopoly: 20 15 10 5 MR D 0 200 400 600 Quantity a. If the firm wants to sell 200 units, what price does it charge? b. If the firm charges a price of $15, how much will it sell? What is MR for parts a and b? Is demand elastic or inelastic? c. d. If the firm charges $10, how much will it sell? What is demand elasticity? Price dollars) 800

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter13: Monopoly And Antitrust

Section: Chapter Questions

Problem 1P

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Similar questions

What is a legal monopoly?
What is a natural monopoly?
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?
If a monopoly firm is earning profits, how much would you expect these profits to be diminished by entry in the long run?
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?
Imagine that you ale managing a small firm and thinking about entering the market of a monopolist. The monopolist is currently charging a high price, and you have calculated that you can make a nice profit charging 10 less than the monopolist. Before you go ahead and challenge the monopolist, what possibility should you consider for how the monopolist might react?
What is the usual shape of a marginal revenue cuwe for a monopolist? Why?
From 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.)
How does the demand curve perceived by a monopolist compare with the market demand curve?
If the transit system were allowed to operate as an unregulated monopoly, what output would it supply and what price would it charge?
In what sense is a natural monopoly natural?
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?