EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 12, Problem 1RQ
To determine
Relevance of Monopoly .
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Students have asked these similar questions
A local magic shop has a monopoly on the production of magic wands. Each customer wants only one magic
wand, and the table below shows each customer's willingness to pay. The marginal cost of producing a wand is
$21 no matter how many are produced.
Quantity demanded
Price per wand ($)
LO
01 2 3 4 5
6 78
30 27 24 21 18 15 12 96
If the shop can charge only a single price, it will charge $
wands.
If the firm practices perfect price discrimination, it will sell a total of
earn a profit of $|
and sell
wands and
1.
The table below represents the demand for Widgets, Inc., which has a
monopoly in the sale of widgets. Calculate total revenue and marginal
revenue for the levels of output given. Draw the demand curve and the
marginal revenue curve in a same graph.
Quantity
0
1
2
3
4
LO
5
Price
$25
21
17
13
9
LO
5
Which of the following markets is susceptible to being a natural monopoly? (Select all that apply?)
O a. Electricity transmission
b. Vaccine production
C.
Music production
d. Sewage management
O e. Airport
Of. Computer production
A Moving to another question will save this response.
O O 0 0
Chapter 12 Solutions
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- The figure on the right shows the demand schedule for a product produced by a single-price monopolist. Price ($) 9 8 0000 7 6 5 4 3 C. 5th unit Quantity demanded What is the lowest level of output at which marginal revenue becomes negative? OA. 6th unit OB. 9th unit D. 7th unit OE. 8th unit 5 6 7 8 9 10 11 Price ($) 141 222 =26=LO 13- 12- 11- 10- 9- 8- 4- 2- 1- 45 6 7 8 9 10 11 12 13 14 15 16 Quantity Earrow_forwardPrice and cost (dollars per unit) 50.00 40.00 S=MC 30.00 20.00- 10.00. MR D. 100 200 300 400 500 Quantity (units per hour) In the above figure, a monopoly should charge $ for its output when maximizing profit. O $10 $20 $30 $40 O $50arrow_forwardQuestion 14 of 30 What is a natural monopoly? A monopoly that faces a high fixed cost and low marginal costs so that the average total cost curve slopes downward. A market in which there is only one firm. A monopoly resulting from one firm's exclusive ownership of a natural resource required to produce a good. O A monopoly that results from government issuing patents. Which of the firms is most likely to be a natural monopoly? O A firm that owns nearly all of the diamond mines in the world. A restaurant that is unable to practice price discrimination and must charge all consumers the same price. O Municipal Power Light, the local supplier of electricity. A pharmaceutical company that has the exclusive right to sell a patented drug. 46°F aarrow_forward
- Ignore AFC and AVC 2. Suppose a pure monopolist faces the following demand schedule and the same cost data as the competitive producer discussed in problem 4 at the end of Chapter 10. Calculate the missing TR and MR amounts, and determine the profit-maximizing price and profit-maximizing output for this monopolist. What is the monopolist's profit? Verify your answer graphically and by comparing total revenue and total cost. LO11.4 Average Total Average Variable Average Marginal Product Fixed Cost Cost Total Cost Cost 0 $45 1 $60.00 $45.00 $105.00 40 2 30.00 42.50 72.50 35 3 20.00 40.00 60.00 30 4 15.00 37.50 52.50 35 5 12.00 37.00 49.00 40 6 10.00 37.50 47.50 45 7 8.57 38.57 47.14 55 8 7.50 40.63 48.13 65 9 6.67 43.33 50.00 75 10 6.00 46.50 52.50 Price Quantity Demanded Total Revenue Marginal Revenue $115 83 63 55 48 42 29 2 % 522332 100 0 1 2 3 4 5 6 7 37 8 9 10 $arrow_forwardExhibit 9-4: A Monopoly Total Quantity Total Fixed Variable Price Demanded Cost Cost $100 $20 $0 90 1 $20 20 80 $20 48 70 3 $20 78 60 4 $20 110 50 $20 150 Refer to Exhibit 9-4. At an output level of 4 units, the monopolist earns a total profits of about O $118.00 O $112.00 O $110.00 O$120.00 2.arrow_forward10. Is the demand for a life-saving drug like Daraprim (Front Page Economics "Drugmaker Hikes Price of AIDS Drug 5,000 Percent!") likely to be elastic or inelastic? How does that affect the pricing decision of a monopolist? LO10-1 IT quarrow_forward
- Table 6.1: A Monopoly Price Quantity Marginal (P) (Q) Cost (MC) $12.00 $4.00 $11.00 9. $5.00 $10.00 12 $6.00 $9.00 15 $7.00 $8.00 18 $8.00 $7.00 21 $9.00 Refer to Table 6.1. The monopoly can earn a maximum profits of about dollars. O 57.00 63.00 42.00 O 60.00arrow_forwardPrice (dollars per unit) 30 24 21 18 16 12 O 4 $12 to $18. $18 to $24. $12 to $18. a $12 to $24. 8 MR b 12 LRAC (inflated) LRAC MC In the above figure, if the natural monopoly is regulated using an average cost pricing rule, but the firm can pad its costs and make the regulator believe its costs are LRAC (inflated), then the price the firm charges will increase from D₁ 20 16 Quantity (millions)arrow_forward2. 0 Quantity 1 2 Polly's Piñatas has a local monopoly in the sale of piñatas. The table below shows the demand for piñatas at various prices. The total cost of production of the various levels of output is also shown. Calculate marginal revenue and marginal cost for the firm. What level of output maximizes profit? What price should the firm charge? 3 4 5 Quantity O 1 2 3 4 5 Price $15 13 11 9 7 5 Price $15 13 11 9 7 5 Total Revenue Quantity Marginal Revenue O 1 2 3 4 5 Total Cost $10 13 17 22 28 35 Total Marginal Cost Cost $10 13 17 22 28 35arrow_forward
- 500 450 400 出350 300 250 是 200 150 LRAC 100 MC 50 MR 3 4 Quantity (hundreds of trips per month) If a marginal cost pricing rule is imposed on the single-price natural monopoly in the figure above, then the deadweight loss will be per month. If a marginal cost pricing rule is imposed on the single-price natural monopoly in the figure above, then the deadweight loss will be per month. $20,000 O so $40,000 O$80,000 $45,000 $5,000 Price and costs (dollars per trip)arrow_forwardScenario 1: Barbara is a producer in a monopoly industry. Her demand curve, total revenue curve, marginal revenue curve, and total cost curve are given as follows: Q = 160 - 4P TR = 40Q- 0.25Q? MR = 40 - 0.5Q TC = 4Q MC = 4 Refer to Scenario 1. How much output will Barbara produce? O A. 56 O B. 22 O C. 72 O D. 0 E. None of the abovearrow_forwardThe diagram shows cost and revenue curves for a natural monopoly producing electricity. Price is dollars per kilowatt hour and quantity is kilowatt hours per day. Suppose this firm is being regulated using a pricing policy of average-cost pricing. In this case, economic losses are equal to O A. $30,000. O B. $0. O C. $11,000. O D. $7,000. O E. $126,000. Co Price($/kwh) 0.15) 0.14 0.13 0.11 8:89 EMR 3.6 Quantity (million) 3 5.4 ATC MC D Q Q 4arrow_forward
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