Consider the table below: Q MC TR MR AR-P 0 0 0 10 1 900 900 1200 1200 $1200 2 1600 700 2100 SKOO 1050 3 2100 500 2700 600 900 4 2400 300 3000 300 750 5 3000 600 3000 0 600 6 4200 700 2700 How much will this monopolist produce and how much profit will he earn? a) He will produce 5 units and earn zero profits. b) He will produce 2 units and earn profits of $500. c) He will produce 4 units and earn $600. d) None of the above.

Consider the table below: Q MC TR MR AR-P 0 0 0 10 1 900 900 1200 1200 $1200 2 1600 700 2100 SKOO 1050 3 2100 500 2700 600 900 4 2400 300 3000 300 750 5 3000 600 3000 0 600 6 4200 700 2700 How much will this monopolist produce and how much profit will he earn? a) He will produce 5 units and earn zero profits. b) He will produce 2 units and earn profits of $500. c) He will produce 4 units and earn $600. d) None of the above.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 30CTQ: If a monopoly firm is earning profits, how much would you expect these profits to be diminished by...

See similar textbooks

Similar questions

What is the usual shape of a total revenue curve for a monopolist? Why?
If the transit system were regulated to operate with no subsidy (i.e., at zero economic profit), what approximate output would it supply and what approximate price would it charge?
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?
What is cost-plus regulation?
What are some of the benefits of the deregulation?
Why does regulatory capture reduce the persuasiveness of the case for regulating industries for the benefit of consumers?
ALCOA does not have the monopoly power it once had. How do you suppose their barriers to entry were weakened?
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
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?
If a monopoly firm is earning profits, how much would you expect these profits to be diminished by entry in the long run?
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?