Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 11, Problem 38P
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
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Why does regulatory capture reduce the persuasiveness of the case for regulating industries for the benefit of consumers?
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The demand and total cost functions for a monopoly firm are:Q(P) = 39.5 – 0.5PTC(Q) = 60 – Q + 0.5 Q2a) Plot the demand, marginal revenue, marginal cost, and average total cost curves, including the intersections with the horizontal and vertical axes. b) What are the profit maximising QM and PM for this firm? c) What is the firm’s profit πM? d) What are the firm's fixed and variable costs? e) What would be the socially optimal Q* and P* (round to 1 decimal place if needed)?
Chapter 11 Solutions
Principles of Economics 2e
Ch. 11 - Is it true that a merger between two films that...Ch. 11 - Is it true that the four-firm concentration ratio...Ch. 11 - Some years ago. two intercity bus companies,...Ch. 11 - As a result of globalization and new information...Ch. 11 - Why would a firm choose to use one or more of the...Ch. 11 - Urban transit systems, especially those with rail...Ch. 11 - From the graph you drew to answer Exercise 11.6,...Ch. 11 - What real world changes made the deregulation...Ch. 11 - What are some of the benefits of the deregulation?Ch. 11 - What might some of the negatives of deregulation...
Ch. 11 - What is a corporate merger? What is an...Ch. 11 - What is the goal of antitrust policies?Ch. 11 - How do we measure a four-firm concentration ratio?...Ch. 11 - How do we measure a Herfindahl—Hirshman Index?...Ch. 11 - Why can it be difficult to decide what a market is...Ch. 11 - What is a minimum resale price maintenance...Ch. 11 - What is exclusive dealing? How might it reduce...Ch. 11 - What is a tie-in sale? How might it reduce...Ch. 11 - What is predatory pricing? How might it reduce...Ch. 11 - If public utilities are a natural monopoly, what...Ch. 11 - If public utilities are a natural monopoly, what...Ch. 11 - What is cost-plus regulation?Ch. 11 - What is price cap regulation?Ch. 11 - What is deregulation? Name some industries that...Ch. 11 - What is regulatory capture?Ch. 11 - Why does regulatory capture reduce the...Ch. 11 - Does either the four-firm concentration ratio or...Ch. 11 - What would be evidence of serious competition...Ch. 11 - Can you think of any examples of successful...Ch. 11 - If you were developing a product (like a web...Ch. 11 - In the middle of the twentieth century, major U.S....Ch. 11 - Why are urban areas willing to subsidize urban...Ch. 11 - Deregulation, like all changes in government...Ch. 11 - Do you think it is possible for government to...Ch. 11 - Use Table 11.5 to calculate the four-firm...Ch. 11 - Use Table 11.5 and Table 11.6 to calculate the...Ch. 11 - If the transit system were allowed to operate as...Ch. 11 - If the transit system were regulated to operate...Ch. 11 - If the transit system were regulated to provide...
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Similar questions
- The figure to the right shows the market demand for electricity and the average total cost and marginal cost of producing electricity for a utility company. Suppose the utility company is a regulated natural monopoly. If government regulators want to achieve economic efficiency, then they will regulate a price of $ —— per kilowatt hour. (Enter a numeric response using a real number rounded to two decimal places.)arrow_forwardAssume a single-price monopolist has an inverse market demand curve given by P(Q)=300-0.5Q, and has a cost curve: C(Q)=125+20Q+0.5Q2. We already know that Monopolist will provide 140 units, Economic profit is 19475, and Economic Rent is 190. If the impact of a 35% ad valorem tax imposed on the consumers in the market. Then: Q1: What is the equilibrium quantity will be sold in the after-tax equilibrium? Q2: What are the economic rents of the monopolist?arrow_forwardIn some regulated industries, regulatory agencies pre-vented prices from falling, and as a result many firms opened for business in those industries. Is this kind of regulation competitive or anticompetitive? Is it a good idea or a bad one?arrow_forward
- The average cost for a typical electric-power-production firm is AC = 100 - 10Q + Q2 where Q is measured in billion kilowatt hours per day. At the current regulated price, consumers demand 4 billion kilowatt hours per day. Is this market a natural monopoly? If demand increases to 10 billion kilowatt hours, is this market a natural monopoly? Explain.arrow_forwardConsider a dental service market. The demand for the service is given by P=600-0.7Q, where P is the price and Q is the quantity demanded. The market is regulated so that each dentist must charge each service provided at the marginal cost, which is $100. If each patient has an insurance that pays 60% of the service received, then how many services will be provided in total? (two dec places)arrow_forwardDeregulation, like all changes in government policy, always has pluses and minuses. What do you think are some of the pluses and minuses for airline deregulation?arrow_forward
- Explain how the implementation of regulations on natural monopoly firm that provide electrical services in Malaysia is carried out.arrow_forwardThe graph below represents Sammy Limited as a regulated monopoly. A) If Sammy Ltd. is focusing on a socially optimal price which point would highlight such, and how much would be the price? Justify your answer. B) If the ATC at that point is $5.50, would Sammy Limited earn a profit/loss/breakeven at the price highlighted above? Justify your answer.arrow_forwardtue or false? after an industry is regulated by federal regulatory agency, companies in the industry can maintain their long run vaibility by continuing to focus on making better products or services.arrow_forward
- Discuss the pros and cons of the creation of a medical marijuana monopoly and later legalization of medical marijuana by the Canadian government in terms the price the users pay, the quantity of medical marijuana produced, and resource allocation efficiency during regulation and after its legalization.arrow_forwardA university’s students have demand for credit hours given by q = 30 – 0.04p, where p is the price per credit hour. a) If the university charges only one price for credit hours irrespective of the number of credit hours a student enrolls for, identify the price per credit hour that would maximize revenue for the university. b) If the university adopts a two-tier pricing structure, identify the structure that would maximize revenue for the university. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardTechvana is the manufacturer of a new drug which they obtained a patent for. The marginal cost of production is $175 per bottle and the elasticity of demand is estimated to be 1.86. What is the optimal price Techvana should charge for a bottle? $94.09 $113.81 $378.49 $325.5 Grizzly Gear manufactures and sells its top tier snowshoes for $1839. Marginal cost of production per pair is $1100 and fixed cost is $362. What is the markup charged on a pair of snowshoes? $1839 $1477 $377 $739arrow_forward
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