PRICE (Dollars per subscription)1009080706050403020100024Pricing MechanismProfit Maximization"610 12 14QUANTITY (Thousands of subscriptions)Marginal-Cost PricingAverage-Cost PricingT8Complete the first row of the following table.MRO TrueO FalseSuppose the government has elected not to impose regulations on the industry, and so the firm faces no regulatory constraints in maximizing profits.16Complete the second row of the previous table.ATCMCComplete the third row of the previous table.D18 20Short RunPriceQuantity(Subscriptions) (Dollars per subscription)Suppose now that the government decides to require the monopolist to set its price equal to marginal cost.ProfitSuppose now that the government decides to require the monopolist to set its price equal to average total cost.Long-Run DecisionTrue or False: Over time, the internet service provider has a very strong incentive to lower costs when subject to average-cost pricing regulations.

A natural monopoly is one in which the largest provider in the industry, frequently the dominant…

PRICE (Dollars per subscription) 90 80 70 20 10 0 02 MR 6 8 10 12 14 QUANTITY (Thousands of subscriptions) Complete the first row of the following table. Pricing Mechanism Profit Maximization Marginal-Cost Pricing Average-Cost Pricing Suppose the government has elected not to impose regulations on the industry, and so the firm faces no regulatory constraints in maximizing profits. Complete the second row of the previous table. 16 ATC MC Complete the third row of the previous table. O True D O False 18 20 Short Run Price Quantity (Subscriptions) (Dollars per subscription) 홈 Suppose now that the government decides to require the monopolist to set its price equal to marginal cost. Profit Suppose now that the government decides to require the monopolist to set its price equal to average total cost. Long-Run Decision True or False: Over time, the internet service provider has a very strong incentive to lower costs when subject to average-cost pricing regulations.

PRICE (Dollars per subscription) 90 80 70 20 10 0 02 MR 6 8 10 12 14 QUANTITY (Thousands of subscriptions) Complete the first row of the following table. Pricing Mechanism Profit Maximization Marginal-Cost Pricing Average-Cost Pricing Suppose the government has elected not to impose regulations on the industry, and so the firm faces no regulatory constraints in maximizing profits. Complete the second row of the previous table. 16 ATC MC Complete the third row of the previous table. O True D O False 18 20 Short Run Price Quantity (Subscriptions) (Dollars per subscription) 홈 Suppose now that the government decides to require the monopolist to set its price equal to marginal cost. Profit Suppose now that the government decides to require the monopolist to set its price equal to average total cost. Long-Run Decision True or False: Over time, the internet service provider has a very strong incentive to lower costs when subject to average-cost pricing regulations.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 19P: Andreas Day Spa began to offer a relaxing aromatherapy treatment. The film asks you how much to...

See similar textbooks

Similar questions

Andreas Day Spa began to offer a relaxing aromatherapy treatment. The film asks you how much to charge to maximize profits. The first two columns in Table 10.5 provide the price and quantity for the demand curve for treatments. The third column shows its total costs. For each level of output, calculate total revenue, marginal revenue, average cost, and marginal cost. What is the profit-maximizing level of output for the treatments and how much will the firm earn in profits?
Why are urban areas willing to subsidize urban transit systems? Does the argument for subsidies make sense to you?
Can you think of any examples of successful predatory pricing in the real world?
Some years ago. two intercity bus companies, Greyhound Lines, Inc. and Trailways Transportation System, wanted to merge. One possible definition of the market for this case was the market for intercity bus service. Another possible definition was the market for intercity transportation, including personal cars, car rentals, passenger trains, and commuter air flights.' Which definition do you think the bus companies preferred, and why?
A publisher faces the following demand schedule for the next novel from one of its popular authors:Price Quantity Demanded100 090 100,00080 200,00070 300,00060 400,00050 500,00040 600,000 530 700,00020 800,00010 900,0000 1,000,000The author is paid $2 million to write the book, and the marginal cost of publishing the book is aconstant $30 per book.a. Compute total revenue, total cost, and profit at each quantity. What quantity would a profitmaximizing publisher choose? What price would it charge? b. Compute marginal revenue. (Recall that MR=∆TR/∆Q.) How does marginal revenue compare tothe price? Explain. c. Graph the marginal-revenue, marginal-cost, and demand curves. At what quantity do themarginal-revenue and marginal-cost curves cross? What does this signify? d. In your graph, shade in the deadweight loss. Explain in words what this means. e. If the author was paid $3 million instead of $2 million to write the book, how would this affectthe publisher’s decision regarding the price…
Question 10 of 20 The accompanying graph depicts a hypothetical monopoly. Follow instuctions 1-3 below to identify the monopoly's profits. 1. Place point E at the monopoly's profit maximizing price and quantity. 2. Move the average total cost (ATC) curve to a position that depicts the monopoly earning a positive profit. 3. Place the area labeled Profit in the area of the graph that represents the monopoly's profit. 10 E MC Profit 9 8 АТС 7 5 4 3 2 1 MR D 1 2 4 7 8 9. 10 Quantity (millions of units) Price ($ per unit)
Ⓒ Macmillan Learning The accompanying graph depicts a hypothetical monopoly. Follow instuctions 1-3 below to identify the monopoly's profits. 1. Place point E at the monopoly's profit maximizing price and quantity. 2. Move the average total cost (ATC) curve to a position that depicts the monopoly earning a positive profit. 3. Place the area labeled Profit in the area of the graph that represents the monopoly's profit. Price ($ per unit) 10 9 8 7 5 3 2 1 0 0 1 O X E MR 2 3 4 5 6 Quantity (millions of units) 7 MC 00 D 9 ATC 10 Profit
C Answer the next question(s) Demand Data Price $5.50 5.00 4.50 3.85 3.35 2.90 2.50 Quantity demanded C. $3.35. D. $4.50. 5769CAW 4 8 on the basis of the following demand and cost data for a pure monopolist: Cost Data Output 3456789 Total cost $5 6 6.50 7.50 9 11 14 38. Refer to the above data. The profit-maximizing price for the monopolist will be: A. $5.00. B. $2.90.
K The table shows a sample of prices and the quantity sold by a monopolist. What is the price elasticity of demand at a price of $97? A. 1 B. 1.04 OC. 0.89 OD. O Price 100 99 98 97 96 95 94 Quantity 95 96 97 98 99 100 101
e ap sep 0 ja ajaloo Purwas ap o Consider a town in which only two residents, Clancy and Eileen, own wells that produce water safe for drinking. Clancy and Eileen can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. Tab Caps Lock Price (Dollars per gallon) 6.00 5.50 5.00 4.50 Esc is 81°F Sunny 4.00 3.50 3.00 2.50 2.00 1.50 1.00 ! 0.50 0 7 Q A Quantity Demanded (Gallons of water) 0 45 17 F2 8- @ Suppose Clancy and Eileen form a cartel and behave as a monopolist. The profit-maximizing price is $ gallons. As part of their cartel agreement, Clancy and Eileen agree to split production equally. Therefore, Clancy's profit is - C VE 2 W 90 135 S. 180 225 270 315 360 405 450 495 540 F3 0+ #M 3 Total Revenue (Dollars) 0 $247.50 $450.00 $607.50 $720.00 $787.50 $810.00 $787.50 $720.00 $607.50 E F4 BO $450.00 $247.50 0 D $ 4 F5 R F % 5 F6 D T F7 ^ 6 G 4- Y FB J+ & 7 per gallon, and the total…
nd ID! But it is also so you can get some pr The diagram shows the market for Film circa 1925, when Kodak ruled the industry. Price of roll 50 40 30 20 10 0 MR D 1. What is the monopoly price of a roll of film? 2. What is the monopoly quantity of film sold? 3. What is the competitive price of a film roll? 4. What is the competitive quantity of film sold? 500 600 700 800 S 006 Quantity per day (thousands), rolls 1,000
4. A monopolist is faced with the following cost and revenue curves: $ 80 70 60 50 40 30 20 10 0 -10 0 -20 100 200 300 400 FMC 500 AC AR 600 MR Quantity (a) What is the maximum-profit output?. (b) What is the maximum-profit price? (c) What is the total revenue at this price and output? (d) What is the total cost at this price and output? (e) What is the level of profit at this price and output? (f) If the monopolist were ordered to produce 300 units, what would be the market price? (g) How much profit would now be made? (h) If the monopolist were faced with the same demand, but average costs were constant $60 per unit, what output would maximise profit? (i) What would be the price now? (j) How much profit would now be made? (k) Assume now that the monopolist decides not to maximise profits, but instead sets a price of $40. How much will now be sold?.