Price ($) Quantity 20.00 1 18.00 2 16.00 3 14.00 4 12.00 5 10.00 6 8.00 7 A.Refer to the above Table. If a monopoly faces the demand schedule given in the table and has a constant marginal and average cost of $4 per unit of providing the product, then how much price should the monopoly charge and how many units should it sell, in order to maximize its profits? Explain.

Price ($) Quantity 20.00 1 18.00 2 16.00 3 14.00 4 12.00 5 10.00 6 8.00 7 A.Refer to the above Table. If a monopoly faces the demand schedule given in the table and has a constant marginal and average cost of $4 per unit of providing the product, then how much price should the monopoly charge and how many units should it sell, in order to maximize its profits? Explain.

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 6SCQ: Imagine a monopolist could charge a different price to every customer based on how much he or she...

See similar textbooks

Similar questions

If the transit system were allowed to operate as an unregulated monopoly, what output would it supply and what price would it charge?
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?
ALCOA does not have the monopoly power it once had. How do you suppose their barriers to entry were weakened?
How does the demand curve perceived by a monopolist compare with the market demand curve?
How can a monopolist identify the profit-maximizing level of output if it knows its total revenue and total cost curves?
How does the quantity produced and price charged by a monopolist compare to that of a perfectly competitive film?
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
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.)
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?
If public utilities are a natural monopoly, what would be the danger in deregulating them?
Is a monopolist allocatively efficient? Why or why not?