a. If this firm keeps increasing its output level, will ATC per bag ever increase? |(Click to select) ♥ Is this a decreasing-cost industry? (Click to select) ♥ b. If you wished to regulate this monopoly by charging the socially optimal price, what price would you charge? 2$ per bag At that price, the size of the firm's (Click to select) ♥ would be $ |million. Will the firm want to exit the industry? (Click to select) ♥ c. You find out that if you set the price at $7 per bag, consumers will demand 30 million bags. At that price, the firm's profit or loss will be $ million.

a. If this firm keeps increasing its output level, will ATC per bag ever increase? |(Click to select) ♥ Is this a decreasing-cost industry? (Click to select) ♥ b. If you wished to regulate this monopoly by charging the socially optimal price, what price would you charge? 2$ per bag At that price, the size of the firm's (Click to select) ♥ would be $ |million. Will the firm want to exit the industry? (Click to select) ♥ c. You find out that if you set the price at $7 per bag, consumers will demand 30 million bags. At that price, the firm's profit or loss will be $ million.

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter15: Monopoly

Section: Chapter Questions

Problem 7PA

See similar textbooks

Similar questions

ALCOA does not have the monopoly power it once had. How do you suppose their barriers to entry were weakened?
Intellectual property laws are intended to promote innovation, but some economists, such as Milton Friedman, have argued that such laws are not desirable. In the United States, there is no intellectual property protection for food recipes or for fashion designs. Considering the state of these two industries, and hearing in mind the discussion of the inefficiency of monopolies, can you think of any reasons why intellectual property laws might hinder innovation in some cases?
If a monopoly firm is earning profits, how much would you expect these profits to be diminished by entry in the long run?
Draw the demand curve, marginal revenue, and marginal cost curves from Figure 9.6, and identify the quantity of output the monopoly wishes to supply and the price it will charge. Suppose demand for the monopolys product increases dramatically. Draw the new demand me. What happens to the marginal revenue as a result of the increase in demand? What happens to the marginal cost curve? Identify the new profit-maximizing quantity and price. Does the answer make sense to you? Figure 9.6 Illustrating Profits at the HealthPill Monolpoly
In what sense is a natural monopoly natural?
If the transit system were allowed to operate as an unregulated monopoly, what output would it supply and what price would it charge?
What is the usual shape of a total revenue curve for a monopolist? Why?
You are the manager for a monopoly with costs, demand, and marginal revenue as in the graph at the top on Figure 1. Does the fact that you operate in a monopoly always guarantee that you can achieve higher profits by increasing the price? Explain. Draw the area representing the profits on the top graph on Figure 1. Suppose one of your suppliers just announced an increase in prices for a specific part that your product requires. What should the impact be to each of the curves on the top graph of Figure 1? Explain carefully. Suppose economic conditions change in such a way that the demand curve for your company shifts left. Draw a demand curve on the bottom graph on Figure 1 that leads to zero economic profits. Draw a demand curve on the bottom graph on Figure 1 such that any further leftward demand shift will cause you to shutdown.
(ONLY PART D) You are the manager for a monopoly with costs, demand, and marginal revenue as in the graph at the top on Figure 1. a. Does the fact that you operate in a monopoly always guarantee that you can achieve higher profits by increasing the price? b. Draw the area representing the profits on the top graph on Figure c. Suppose one of your suppliers just announced an increase in prices for a specific part that your product requires. What should the impact be to each of the curves on the top graph of Figure 1? Explain d. Suppose economic conditions change in such a way that the demand curve for your company shifts Draw a demand curve on the bottom graph on Figure 1 that leads to zero economic profits. Draw a demand curve on the bottom graph on Figure 1 such that any further leftward demand shift will cause you to shut down.