Principles Of Microeconomics 2e
2nd Edition
ISBN: 9781680922219
Author: Timothy Taylor, Steven A Greenlaw, David Shapiro
Publisher: MCGRAW-HILL HIGHER EDUCATION
expand_more
expand_more
format_list_bulleted
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 price would it charge?
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Suppose a monopolist's per-period demand curve for a new computer chip is given by p = 100 -
0.25q, and its marginal cost (mc) is $20.
(a) What is the per-period value of the innovation to society, v, if the innovation is competitively
supplied instead?
(b) Calculate per-period consumer surplus, deadweight loss, and monopoly profit.
(C) Calculate the (discounted) present value of the patent to the monopolist if r-0.05 (or 5%) and
n=20 years. Recall that 7=[1-(1/1+r)"]/r. Note: (1/1.05)20-0.38.
The marginal cost pricing model calculates a markup over marginal costs using estimates of the price elasticity of demand. Will any other pricing strategy result in higher profits?
A pharmaceutical company Eureka Bio has discovered a Corona vaccine that can be produced at constant marginal cost of R10. The company has entered into offtake dosage agreements with country A and B. Country A has a dosage demand of QA = 200 - PA and Country B has dosage demand QB = 160 -PB
a. If WHO introduces a regulation on the price of dosages, calculate the price, profits and dosages that Eureka can charge.
Chapter 11 Solutions
Principles Of Microeconomics 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...
Additional Business Textbook Solutions
Find more solutions based on key concepts
Discussion Questions 1. What characteristics of the product or manufacturing process would lead a company to us...
Managerial Accounting (4th Edition)
Ravenna Candles recently purchased candleholders for resale in its shops. Which of the following costs would be...
Financial Accounting (12th Edition) (What's New in Accounting)
What are the four elements of the budgeting cycle?
Cost Accounting (15th Edition)
Define costvolumeprofit analysis.
Horngren's Cost Accounting: A Managerial Emphasis (16th Edition)
How do sustainable business practices benefit consumers?
Principles of Management
What is the impact on the accounting equation when a sale occurs? A. both sides increase B. both sides decrease...
Principles of Accounting Volume 1
Knowledge Booster
Similar questions
- In some cities, Uber has a monopoly on ride-sharing services. In one town, the demand curve on weekdays is given by the following equation: P = 50 - Q. However, during weekend nights, or surge hours, the demand for rides increases dramatically and the new demand curve is P = 100 - Q. Assume that marginal cost is zero. a. Determine the profit-maximizing price during weekdays and surge hours. b. Determine the profit-maximizing price during weekdays and surge hours if MC = 10 instead of zero.arrow_forwardSuppose you own a tax preparation services company, with fixed costs of $3,000/month and marginal costs of $25/appt.If the price is $60/appt, 500 appointments would be sold. If the price is $50/appt, 760appointments would be sold. a.)Use these figures to calculate the price elasticity of demand for your services. b.)Calculate the monthly profits and profit margins (profit/revenue) associated with the price of $60/appt and $50/appt. c.)Given these calculations, what price should you charge for your services, $50/apptor $60/appt? Explainarrow_forwardBabydrink is a monopolist due to its patent in infant formula. The total cost for production in dollars is given by C(q) = 24q² + 600q +9600. The market demand it faces is p = 700 - q. (a) To maximize profit, how much should Babydrink produce? And what is the price it charges? (b) Verify (answer from a) gives and maximum and not minimum?arrow_forward
- The airline’s use of demand pricing results in passengers paying different prices for essentially the same seat. What is the benefit of this practice to the airline and to the passengers? What is the drawback to the airline and the passengers? Do you think this practice should be continued? If not, what would be the best alternative?arrow_forwardA monopolist with total cost 500 - 100Q + 3Q2 and marginal cost MC = 6Q - 100 faces average revenue (demand) P = 2,000 - 2Q and hence marginal revenue MR = 2000 - 4Q. Calculate: (a) the quantity that the monopolist will sell (b) the price that the monopolist will charge (c) the competitive quantity (d) the competitive price (c) the deadweight loss from monopoly powerarrow_forwardWhat is advantage and disadvantage of economic prices for non tradable good in distorted marketsarrow_forward
- Andrea’s Day Spa began to offer a relaxing aromatherapy treatment. The firm asks you how much to charge to maximize profits. The first two columns in the table below provide the price and quantity for the demand curve for treatments. The fifth column shows its total costs. Complete the table. What is the profit-maximizing level of output for the treatments and how much will the firm earn in profits? Price Quantity Total Revenue Marginal Revenue Total Cost Marginal Cost $25 0 $0 N/A $130 N/A $24 10 $275 $23 20 $435 $22.50 30 $610 $22 40 $800 $21.60 50 $1005 $21.20 60 $1225arrow_forwardGive typing answer with explanation and conclusion A monopolist has a demand curve given by P = 88 − Q and a total cost curve given by TC = 34 + Q2. The associated marginal cost curve is MC = 2Q. Suppose the monopolist also has access to a foreign market in which he can sell whatever quantity he chooses at a constant price of 60. How much will he sell in the foreign market? What will his new quantity and price be in the original market?arrow_forwardAssume that Gas & Minerals is the only copper mining firm in Chile. The national demand for copper in thousands of tonnes per month is: q^d(p) = 15 - pThe total costs in millions of dollars are: c(q) = 5q(a) What would be the profit-maximising level of production for this firm? Determine the monopoly price and quantify the profits. Graph the demand, marginal revenue and marginal cost, identifying their values along with determining the social loss generated and identifying it in the graph above. Assume now that due to a bad internal restructuring, the operations manager was fired and a professional with little mining experience was hired. The new manager does not know environmental protocol and mining waste (tailings) has gotten out of control and has been dumped into a river. This generated a negative externality on copper production. The estimated damage is US$5 million per 1,000 tonnes.(b) Obtain the social marginal cost of this mining activity.(c) What level of production will…arrow_forward
- T/F Monopoly market is a macroeconomic concept.arrow_forward(a) A monopolist has discovered that the inverse demand function of a person with income Y for the monopolist’s product is P = 0.002Y-Q where P is the price, Y the income, and Q is the output. The monopolist can observe the incomes of its consumers and hence vary its price accordingly. The monopolist has a total cost function C(Q) = 100Q. Calculate the profit maximising price as a function of the consumer’s income Y carefully explaining all the steps in the derivation of the formula. (b) A monopolist has a constant marginal cost of £2 per unit and no fixed costs. He faces two separate markets in the United States and in the UK. The goods sold in one market are never resold in the other. He sets one price P1 for the US market and another price P2 for the UK market (both measured in £). The demand in the United States is given by Q1=7,000-700P1 and the demand in the UK is given by Q2=1,200-200P1. Calculate the profit maximising output produced and price charged in each country by the…arrow_forwardAssume quantities need not be integers. Assume a profit maximizing monopolist with marginal cost MC(Q) = Q and fixed cost equal to $2 faces demand MWTP(Q) = 20 - 2Q. Assuming it must charge the same price for each unit it sells, what price does it choose? Round to two decimal places and do not enter the currency symbol. If your answer is $1.125, enter 1.13.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Microeconomics: Principles & PolicyEconomicsISBN:9781337794992Author:William J. Baumol, Alan S. Blinder, John L. SolowPublisher:Cengage LearningManagerial Economics: Applications, Strategies an...EconomicsISBN:9781305506381Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. HarrisPublisher:Cengage Learning
Microeconomics: Principles & Policy
Economics
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:Cengage Learning
Managerial Economics: Applications, Strategies an...
Economics
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:Cengage Learning