94% Preview File Edit View Go Tools Window Help Tue 8:25 AM Microeconomics 21st PDF eBook.pdf (page 278 of 649) Q Search KEY GRAPH Microeconomics 21st PDF eB... Report een Shote n 39 57 AM FIGURE 12.4 Profit maximization by a pure monopolist. The pure monopolist maximizes profit by producing at the MR = MC output, here Q-5 units. Then, as seen from the demand curve, it will charge price P $122. Average total cost will be A $94 meaning that per-unit profit is P-A and total profit is $200 239 175 n Shot ..0.15 PM МС 150 Profit 5x (P-A). Total economic profit is thus represented Pm$122 125 per unit by the green rectangle Economic .АTC profit 100 n Shot .5.05 PM 75 A $94 MR MC 50 240 25 n Shot .6.42 PM MR Qm-5 units KEY GRAPН 4 5 6 7 8 9 0 2 3 10 о Quantity n Shot 57.32 PM QUICK QUIZ FOR FIGURE 12.4 1. The MR curve lies below the demand curve in this figure because the a. demand curve is linear (a straight line). b. demand curve is highly inelastic throughout its full length c. demand curve is highly elastic throughout its full length d. gain in revenue from an extra unit of output is less than the price charged for that unit of output 3. This pure monopoli st: a. charges the highest price that it could achieve. b. earns only a normal profit in the long run. c. restricts output to create an insurmountable entry barrier d. restricts output to increase its price and total economic profit : n Shot 2.22 AM 241 4. At this monopolist's profit-maximizing output a. price equals marginal revenue . NOW (AD 5 Price, costs, and revenue

Question

Hi, I do not understand why B is the correct answer for number 3. How do I know that this monoply is earning a normal economic profit in the long run?

94%
Preview File Edit View Go Tools Window Help
Tue 8:25 AM
Microeconomics 21st PDF eBook.pdf (page 278 of 649)
Q Search
KEY GRAPH
Microeconomics 21st
PDF eB...
Report
een Shote
n 39 57 AM
FIGURE 12.4 Profit maximization by a pure
monopolist. The pure monopolist maximizes profit by
producing at the MR = MC output, here Q-5 units.
Then, as seen from the demand curve, it will charge
price P $122. Average total cost will be A $94
meaning that per-unit profit is P-A and total profit is
$200
239
175
n Shot
..0.15 PM
МС
150
Profit
5x (P-A). Total economic profit is thus represented
Pm$122
125
per unit
by the green rectangle
Economic
.АTC
profit
100
n Shot
.5.05 PM
75
A $94
MR MC
50
240
25
n Shot
.6.42 PM
MR
Qm-5 units
KEY GRAPН
4 5 6 7 8
9
0
2
3
10 о
Quantity
n Shot
57.32 PM
QUICK QUIZ FOR FIGURE 12.4
1. The MR curve lies below the demand curve in this figure because
the
a. demand curve is linear (a straight line).
b. demand curve is highly inelastic throughout its full length
c. demand curve is highly elastic throughout its full length
d. gain in revenue from an extra unit of output is less than the price
charged for that unit of output
3. This pure monopoli st:
a. charges the highest price that it could achieve.
b. earns only a normal profit in the long run.
c. restricts output to create an insurmountable entry barrier
d. restricts output to increase its price and total economic profit
:
n Shot
2.22 AM
241
4. At this monopolist's profit-maximizing output
a. price equals marginal revenue
.
NOW
(AD
5
Price, costs, and revenue
View transcribed image text
Expand

Expert Answer

Want to see the step-by-step answer?

Check out a sample Q&A here.

Want to see this answer and more?

Experts are waiting 24/7 to provide step-by-step solutions in as fast as 30 minutes!*

*Response times may vary by subject and question complexity. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers.
Tagged in
Business
Economics

Related Economics Q&A

Find answers to questions asked by students like you.

Q: 4. LO 4 In Figure 3.11, after the 1981-1982 reces- sion, does the price level appear to be procyclic...

A: Philips curve: It states that inflation and unemployment are inversely related to each other. It mea...

Q: Complete the following table by finding total product (tp), Average product (ap), Marginal product (...

A: Average product (AP) is the product per unit of labor. The formula to calculate AP is:

Q: Which of the following would both make the interest rate on a bond higher than otherwise?   a. ...

A: Bonds are defined as long term debt which is exclusively been provided by the company to generate fu...

Q: What is the price elasticity of demand at any point on a perfectly inelastic demand curve?

A: The price elasticity of demand measures the percentage change in quantity demanded due to percentage...

Q: Economics is the study of how a society manages its resources to

A: Click to see the answer

Q: If a single supplier produces such a small portion of the total market output that changes in its pr...

A: To determine the impact of the change in production by a supplier who supplies very small proportion...

Q: Built-in Stability a.Explain the difference between discretionary and non-discretionary fiscal poli...

A: Click to see the answer

Q: Brief explanation on keynesian model and its diagram

A: Aggregate Demand: It refers to the total demand for goods and services in the economy within a given...

Q: Question 14 Consider a newspaper with production function f(L,K)= 4min{L,K}, where L is the units of...

A: The production function is shown in white board.f (L, K) = 4 min {L, K}Where, L is the units of labo...

Q: MNLOGS harvested logs (with no inputs from other companies) from their property in northern Minnesot...

A: Given,MNLogs harvested logs with zero input cost and sold these logs to MNLumber for $1,500. Then MN...

Q: Elaborate on the TWO (2) main components of money based on the narrowest definition of money.

A: Narrowest definition money or M1 refers to the sum of currency held with the public, demand deposits...

Q: b. Explain in some detail the 4 phases of the business cycle, Please don’t include Depression as one...

A: Business Cycle: It refers to the fluctuation (rise or fall) in the economic trade that occurs over t...

Q: During the Christmas holiday season the price for Christmas trees increases and the quantity demande...

A: According to the law of demand if there is a rise in the price level, the quantity demanded will fal...

Q: Why is air pollution a matter of ethics?

A: Ethics or moral philosophy is a branch of philosophy that involves systematizing, defending, and rec...

Q: Given that: U(X,Y) = X1/2+Y1/2 and the demand functions are: X=0.218I Y=0.152I   When I = 50, X = 10...

A: The marginal utility of income refers to the additional utility derived from the increase or decreas...

Q: The table below pertains to Pieway, an economy in which the typical consumer’s basket consists of 10...

A: The consumer price index is the measure which is used to measure the changes in the price level of t...

Q: 2. What happens to the amount of deadweight loss as a tax increases? Explain and use supply/demand d...

A: Hey, Thank you for the question. According to our policy we can only answer 1 question per session. ...

Q: 6.8) Indicate whether each of the following statements is true, false, or uncertain. Explain why   d...

A: d.The horizontal equity theory of the taxation states that the people with similar income levels and...

Q: If banks expect that the rate of inflation in the coming year will be 4.95% and they want a real ret...

A: The real interest rate is the adjusted interest rate that doesn’t include the effect of inflation ra...

Q: CENGAGE MINDTAP Assignment 8 (Ch 14) 1 + 0 0 1 2 3 4 5 6 7 8 9 10 QUANTITY (Millions of small boxes)...

A: As the equilibrium price is given to be $5, so we take $5 price for each unit.Total Revenue = Price ...

Q: The long run average total cost curve is tangent to an infinite number of short run _______ cost cur...

A: The long-run average total cost (LATC) curve of a firm demonstrates the minimum or the least average...

Q: Which of the following is a true statement about the difference between a price-taker firm and a com...

A: A price taker firm is the firm which takes the prevailing market price of a service or good as given...

Q: 4:21 lLTE Work 13. In the Nash equilibrium of a prisoner's dilemma: 14. Suppose Acme and Mega produc...

A: Prisoner’s dilemma is a two criminals’ game and the outcome depends on the simultaneous decisions th...

Q: Saving, Investment, and the Financial System - End of Interest rate Chapter Problems 24% 22 5. The g...

A: The increase in government spending by $ 200 B increase the demand for loanable funds from D to D1 a...

Q: The Bank of England will prevent members of its interest rate-setting committee from publishing indi...

A: The opinions of the decision-maker have great impact on investors and general consumers. Any opinion...

Q: Consider the production function of the firm below. Which of the following is NOT true? The marginal...

A: The marginal product of labor at B is 70 units – It is true (70-0)The total product is increasing as...

Q: Does the fact that your bank keeps only a fraction of your account balance in reserve make you uncom...

A: Click to see the answer

Q: Ben Hunt operated a farm under the name of S.B.H. Farms.  Hunt went to Mollary Bank and Trust and re...

A: An indifference curve is a graphical representation of different combinations of two commodities tha...

Q: In the healthcare economy, as in many other markets, if the firm has a high capital-to-labor ratio, ...

A: To show the relationship between capital-labor ratio and the responsiveness to a change in price.

Q: 1. The demand and supply schedules for pop in Vancouver are as follows: Price ($/pack of 2 bottles) ...

A: a. (1) The diagram below shows the pop market with DD as the demand curve and SS1 as the supply curv...

Q: An individual consumes two goods, clothing and food. Given the information below, illustrate the Eng...

A: The Engel curve represents the relation between the income of the household and the expenditure for ...

Q: Please help me finish this question I'm very confused!!! I attached a photo of the question.

A: Total cost of production for a firm is the sum of total fixed cost and total variable cost.TC = TFC ...

Q: Suppose the California legislature passed a sweeping law to lower the number of regulations for buil...

A: Click to see the answer

Q: Assume that a hypothetical economy with an MPC of 0.8 is experiencing severe recession.  A) By how m...

A: The value of spending multiplier can be calculated by using the given formula.

Q: The diagram to the right shows a consumer's indifference map for goods X and Y plus three budget lin...

A: To find the price of good X along the indifference curve L1.

Q: Apart from risk components, several macroeconomic factors-such as Federal Reserve (the Fed) policy, ...

A: The long term interest rate is also determined by average expected inflation rate. So that short ter...

Q: In the first year, inflation is 2.75% and the nominal interest rate for both fixed and variable rate...

A: Real interest rate can be calculated using the two formulae shown below. The approximation formula o...

Q: The residents of the town Ectenia all love economics and the mayor proposes building an economics mu...

A: Part a)The ATC and MC curves are displayed below. Since there are no variable costs, the Average tot...

Q: C Search Textbook Solutions + V Young Nails Inc MindTap - Cengage Lea X e Learnin https://ng.cengage...

A: The economy can be bring back to the natural level of output by increasing aggregate demand by using...

Q: Suppose you are a Social Security recipient. In 2006 you receive $700 per month in Social Security b...

A: a) Given: Social security benefits per month = $700Cost of living adjustment = 3.2%Therefore, monthl...

Q: Hint: After placing the rectangle on the graph, you can select an endpoint to see the coordinates of...

A: The given price level is $15, which is equal to marginal cost (MC) at the quantity level of 8,000 sh...

Q: Question 24 Consider the following production function when K is fixed. (This is a description of th...

A: False, the production function does not satisfy the law of decreasing marginal returns to labor.

Q: A manufacturer of scrapbook kits has a fixed cost of $30,000. This manufacturer expects to sell 6,00...

A: Given:Fixed Cost: $30,000Expected Quantity to be sold = 6000 unitsSelling Price = $17.5Mark Up is 20...

Q: 4:21 lLTE Work 9. Suppose Campus Books, a profit- maximizing firm, is the only supplier of the textb...

A: Given the reservation price of the students, the profit-maximizing firm set the book price to be $36...

Q: hey i was doing my homework and i couldnt figure out the last question

A: Average total cost is the per unit cost incurred in producing a commodity.

Q: .12) In the effort to reduce alcohol consumption, the government is considering a $1 tax on each gal...

A: Hey, Thank you for the question. According to our policy we can only answer up to 3 subparts per ses...

Q: draw a graph of indifference curves and budget line. including explain the meaning of the marginal r...

A: The MRS of X for Y is defined as the amount of Y which can be given up by the consumer to gain an ad...

Q: The United Kingdom (UK) held a national referendum (vote) on whether the UK should remain in the Eur...

A: The Brexit will have serious implications in terms of reduced trade of goods due to increased barrie...

Q: Given the following data: Gross Investment Expenditure.. .$200 Government Transfer Payments...150 Bu...

A: a.The gross domestic product is the sum total of money value of all the final goods and services pro...

Q: What are the major characteristics of a firm competing under conditions of monopoly?

A: Some important characteristics of monopoly market are listed as follows. 

Transcribed Image Text

94% Preview File Edit View Go Tools Window Help Tue 8:25 AM Microeconomics 21st PDF eBook.pdf (page 278 of 649) Q Search KEY GRAPH Microeconomics 21st PDF eB... Report een Shote n 39 57 AM FIGURE 12.4 Profit maximization by a pure monopolist. The pure monopolist maximizes profit by producing at the MR = MC output, here Q-5 units. Then, as seen from the demand curve, it will charge price P $122. Average total cost will be A $94 meaning that per-unit profit is P-A and total profit is $200 239 175 n Shot ..0.15 PM МС 150 Profit 5x (P-A). Total economic profit is thus represented Pm$122 125 per unit by the green rectangle Economic .АTC profit 100 n Shot .5.05 PM 75 A $94 MR MC 50 240 25 n Shot .6.42 PM MR Qm-5 units KEY GRAPН 4 5 6 7 8 9 0 2 3 10 о Quantity n Shot 57.32 PM QUICK QUIZ FOR FIGURE 12.4 1. The MR curve lies below the demand curve in this figure because the a. demand curve is linear (a straight line). b. demand curve is highly inelastic throughout its full length c. demand curve is highly elastic throughout its full length d. gain in revenue from an extra unit of output is less than the price charged for that unit of output 3. This pure monopoli st: a. charges the highest price that it could achieve. b. earns only a normal profit in the long run. c. restricts output to create an insurmountable entry barrier d. restricts output to increase its price and total economic profit : n Shot 2.22 AM 241 4. At this monopolist's profit-maximizing output a. price equals marginal revenue . NOW (AD 5 Price, costs, and revenue