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A: demand P = 25 − 2Q, and costs are C(Q) = 5Q.
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A: Monopoly is a form of market in which there is one seller in the market.
Q: i. State what market structure exists in St. Lucia and illustrate how equilibrium price and quantity…
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Q: Explain using the above examples why a monopoly is sometimes a problem for an economy or a…
A: Monopoly is the form of market structure where single seller sells goods and services to the large…
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- Both questions answered Question 1: Which of the following is true of a profit-maximizing monopolist firm? 1) It has no incentive to minimize its costs 2) It sets price equal to marginal cost 3) It chooses a production level higher than that which is socially optimal 4) It chooses a production level on the elastic portion of the demand curve 5) It chooses a production level such that marginal revenue is greater than marginal cost Question 2: In which of the following market structures do firms maximize profits by producing at the point where price is equal to marginal cost? I. Perfect competition II. Monopoly III. Oligopoly IV. Monopolistic competition 1) I 2) II 3) II and III 4) I and IV 5) I, II, III, and IVSources of monopoly power A monopolist, unlike a competitive firm, has some market power. It can raise its price, within limits, without the quantity demanded falling to zero. The main way it retains its market power is through barriers to entry—that is, other companies cannot enter the market to create competition in that particular industry. Complete the following table by indicating which barrier to entry appropriately explains why a monopoly exists in each scenario. Scenario Barriers to Entry Exclusive Ownership of a Key Resource Government-Created Monopolies Economies of Scale The Aluminum Company of America (Alcoa) formerly controlled all U.S. sources of bauxite, a key component in the production of aluminum. Given that Alcoa did not sell bauxite to any other companies, Alcoa was a monopolist in the U.S. aluminum industry from the late 19th century until the 1940s. In the public water industry, low average total costs are obtained only…One difference between a perfectly competitive firm and a monopoly is that a perfectly competitive firm produces where Question 7 options: a) marginal cost equals price, whereas a monopolist produces where price exceeds marginal cost b) marginal cost equals price, whereas a monopolist produces where cost exceeds price c) price exceeds marginal cost, whereas a monopolist produces where marginal cost equals price d) marginal cost exceeds price, while a monopolist produces where marginal cost equals price
- Parker Plaintiff is in a hurry and stops by a convenience store for a drink. The store is out of her favorite brand of soda, so Parker decides to go elsewhere. Before Parker can leave, she is stopped by a store employee that accuses her of shoplifting. The employee escorts Parker to a small room in the back of the store and tells Parker that if she attempts to leave the room, she will be arrested and sent to jail. Parker waits for over an hour before the manager tells her that she is free to go. What advice would you give Parker? Discuss the possible tort claim Parker might have against the store. Be sure to include the elements of the tort and relate those elements to the scenario. If Parker decides to pursue a claim against the store, should she consider a lawsuit, mediation, or arbitration? explain why your choice is the best option.A monopoly producer of music videos sells them to TV stations and to individual consumers. BecauseTV stations have special formatting and quality requirements, producers can separate these two markets and sellessentially the same product at two different prices. You are given the following demand curves per year for thesedistinct markets:TV stations: P1 = 80 - 0.01Q1Individual consumers: P2 = 60 - 0.01Q2where P refers to prices charged to each group and Q refers to quantities demanded by each group. The variable costof producing music videos (once the video has been shot) is uniform at €4 per video. In addition, there are sunk fixedcosts of €20,000 for the shooting of each music video (for design, promotion and hiring artists).3.1. If the producer of music videos can price discriminate by charging different prices to each group, determine theprofit-maximizing price charged to TV stations and to individual consumers.3.2. Assume now that the monopoly producer of music videos is unable to…In Salop’s model of entry deterrence, the unconstrained monopoly earns profits (in present value terms) equal to some amount v0. Suppose v0 = 100. If entry were to occur, the two firms would share the market, each earning v1.(A) Why do we expect 2 v1 to be less than 100 ? (B) The incumbent monopoly can prevent entry by expending a fixed and irreversible amount C that the entrant must match. What conditions on the size of C will both successfully prevent entry, and equally importantly, result in greater profit for the incumbent than by allowing entry?
- In Canada, in the majority of cases where there is a natural monopoly, how does the government usually deal with the problem? Question 18 options: through regulation by splitting the natural monopoly into smaller companies by always setting price equal to marginal cost by turning the natural monopoly into a public enterpriseSee pictures below... So, given the summary table of the two different market structures, you can infer that, in general, the price is lower under a _________, and the quantity is lower under a ______________.All of Ruritania’s domestic energy needs are met through nuclear fission. Energy production isthe responsibility of a Government-owned company named Umbrella Corp.To generate energy, Umbrella Corp uses uranium. The uranium is supplied by OCP that mines itin the town of Zenda where it is the sole employer. For reasons of state OCP can only sell whatit extracts to Umbrella Corp. As OCP is the only employer in Zenda it is a monopsonist in the labor market, while UmbrellaCorp is a monopsony when it buys uranium from OCP. To mine one kilogram of uranium a day, OCP needs one unit of labor. The supply of laborif it pays a wage of w florins is given by S(w) = 2w. Each kilogram of uranium that Umbrella Corp. buys from OCP can be used to produce 360,000kilowatt-hour of energy. In addition to the purchase price of uranium, Umbrella Corp incurs anadditional unit cost of 35,800 florins per kilogram of uranium used for energy production. The energy produced is then sold by Umbrella Corp to consumers…
- Identify each of the four market structures. Identify the market structure that has the least market power and the one that has the most market Identify the market structure that is characterized by a single Identify the market structure that is characterized by each seller selling identical products. Identify the type of elasticity that applies to a demand curve for a single firm in a perfectly competitive market Explain why the demand curve for a monopolist is inelastic. Identify two ways governments try to reduce the market power ofAssuming that the firm is the only producer in a market, the social cost of the output decision of a profit-maximizing monopoly firm. Can you discuss the assumption that the government forces the monopoly firm to lower its price? Would it be possible to show how the output of the firm would increase? Thank you!Given the total cost function TC = Q2 + 100 and the inverse demand function P = 120 – Q faced by a monopoly. If the government imposes a specific tax of 20 per unit of output, a. Calculate the profit-maximizing output, price level, the profit of the monopoly, and the tax revenue generated by the government b. Graphically illustrate the change in consumer surplus and deadweight loss due the imposition of the tax. Also indicate the values computed in part a in your illustration
