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 5SCQ
Why would a firm choose to use one or more of the anticompetitive practices described in Regulating Anticompetitive Behavior?
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A product may be provided by a monopolist, but the market may be contestable. How can it be that a monopoly can be as efficient as a perfectly competitive market?
why do perfectly competitive firms maximize their profits by producing so that the price is equal to marginal cost, but monopolists maximize their profits by setting a price that is greater than marginal cost?
A (classic) monopolist faces a demand curve given by Q(P) = 100 – 0.25P and a continuously divisible product in a factory with cost function TC(Q) = 3.5Q^2 + 100Q + 600.a: Calculate the inverse demand curve P(Q), total revenue curve TR(Q), marginal revenue curveMR(Q), and marginal cost curve MC(Q).b: Carefully write out this firm’s profit maximization problem, using the particulars of thisproblem.c: Give the marginal condition (equation) that characterizes the solution to this problem. Solvethis condition for the firm’s optimal quantity Q*.d: Calculate the optimal price.e: Calculate the firm’s maximized profit.f: On a graph with quantity on the horizontal axis, neatly plot the marginal revenue curve andmarginal cost curve. Show Q* on your graph.g: Label areas on your graph using a, b, c, etc. and indicate the areas that correspond to totalrevenue, variable cost, and producer surplus at Q*.h: Calculate the firm’s producer surplus at Q*
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
- A monopolist faces the demand curve Q(P ) = 50 − P 2 . The firm can produce output with marginal costs MC(Q) = Q and no fixed costs. Hint for the following questions: if revenue is of the form R(Q) = (a − bQ)Q, then the derivative of revenue is a − 2bQ. (a) What is the profit maximizing price for the monopolist in this market? (b) What is the deadweight loss from monopoly in this market, compared to the efficient output that sets price equal to marginal cost? *Please fully explain out any matharrow_forwardThe monopolist faces the demand curve D(p) = 100 – 2p. Its cost function is c(y) = 2y. What is your optimal level of production and prices? Solve mathematically and grapharrow_forwardThe following table (see MS Word/PDF version of Take-Home Quiz #5 handout, page 1) shows a market demand a monopolist is facing. Use the table to answer questions #4 thru #6. Average Marginal Marginal Rev. Total Economic Quantity Price Total Rev. Rev. Cost Cost Profit (Q) (P) (TR) (AR) (MR) (MC) (TC) (II) === =====%3D ====== =====3= 1 35 35 11 11 24 64 32 29 11 22 42 3 29 11 4 17 11 23 11 11 6. 120 11 7 17 -1 11 -7 11 9 99 11 -13 11 10 80 8. 11 [Extra Credit 2 pts] Fill all blanks in the Table 1 on the Quiz #5 handout. You will receive extra credit if you submit the completed table via email. Q4. If the monopolist sells 8 units of its product, how much total revenue (TR) will it receive from the sale? 40 O 87 O 104 O 112 O 164arrow_forward
- What is meant by the term “market power”? Can a monopolist charge any price it wants because it is the only seller?arrow_forwardWhat is meant by the term “market power”? Can a monopolist charge any price it wants because it is the only seller? What is the profit maximizing /loss minimizing rule a firm should follow regardless of the market structure within which the firm is operating? If the monopolist is incurring a short run economic loss, what are some options the monopolist has?arrow_forwardHow will a monopolist respond to a rise in fixed costs?arrow_forward
- The perfectly competitive firm exhibits resource allocative efficiency (P = MC), but the single-price monopolist does not. What is the reason for this difference?arrow_forwardWhy does the monopolist always produce only until that level of output where the own-price elasticity of demand is equal to unity ? Elucidate this either graphically or algebraicallyarrow_forwardWhat is predatory pricing? How might it reduce competition, and why might it be difficult to tell when it should be illegal?arrow_forward
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