The monopoly and price elasticity of a demand.

Question

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Answer 1

Question

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

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Students have asked these similar questions

4. You are the manager of a monopoly, and your demand and cost functions are given by P = 300 − 3Q and C(Q) = 1,500 + 2Q2, respectively. (LO3, LO4) a. What price–quantity combination maximizes your firm’s profits? b. Calculate the maximum profits. c. Is demand elastic, inelastic, or unit elastic at the profit-maximizing price–quantity combination? d. What price–quantity combination maximizes revenue? e. Calculate the maximum revenues. f. Is demand elastic, inelastic, or unit elastic at the revenue-maximizing price–quantity combination? 6. The accompanying diagram shows the demand, marginal revenue, and marginal cost of a monopolist. (LO1, LO3, LO5) a. Determine the profit-maximizing output and price. b. What price and output would prevail if this firm’s product were sold by price-taking firms in a perfectly competitive market? c. Calculate the deadweight loss of this monopoly. 8. The elasticity of demand for a firm’s product is –2.5 and its advertising elasticity of demand is 0.2.…

Use the accompanying graph to answer the questions that follow. (LO1, LO2) a. Suppose this monopolist is unregulated. (1) What price will the firm charge to maximize its profits? (2) What is the level of consumer surplus at this price? b. Suppose the firm’s price is regulated at $80. (1) What is the firm’s marginal revenue if it produces 7 units? (2) If the firm is able to cover its variable costs at the regulated price, how much output will the firm produce in the short run to maximize its profits? (3) In the long run, how much output will this firm produce if the price remains regulated at $80?

As the manager of a monopoly, you face potential government regulation. Your inversedemand is P = 40 − 2Q, and your costs are C(Q) = 8Q. (LO1, LO2, LO6)a. Determine the monopoly price and output.

Answer 2

Question

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

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Answer 4

Question

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

Answer 6

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

Answer 7

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Answer 8

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

Answer 12

Ch. 12.4 - The MR curve lies below the demand curve in this...Ch. 12.4 - Prob. 2QQ Ch. 12.4 - Prob. 3QQ Ch. 12.4 - Prob. 4QQ Ch. 12 - Prob. 1DQ Ch. 12 - Prob. 2DQ Ch. 12 - Prob. 3DQ Ch. 12 - Prob. 4DQ Ch. 12 - Prob. 5DQ Ch. 12 - Prob. 6DQ

The monopoly and price elasticity of a demand.

The monopoly and price elasticity of a demand.

Explanation of Solution

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