Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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Question
Chapter 14, Problem 14.7P
a)
To determine
To find: The output and price in the case of
b)
To determine
To find: Total loss of
c)
To determine
To find: The graph for the calculated results.
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Consider a monopoly market in which the market demand curve is given by P = 240 – 2Q, the marginal revenue curve is MR = 240 – 4Q, the marginal cost curve is MC = 2Q, and there are zero fixed costs. Suppose the government intervenes and turns the market into a competitive market, and all the firms in the market have the same marginal cost curve as the monopolist, MC = 2Q, and zero fixed costs. How much is the resulting gain in total surplus?[12:17]800
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Question 27
Consider a monopoly market in which the market demand curve is given by P = 240 – 2Q, the marginal revenue curve is MR = 240 – 4Q, the marginal cost curve is MC = 2Q, and there are zero fixed costs. Suppose the government intervenes and turns the market into a competitive market, and all the firms in the market have the same marginal cost curve as the monopolist, MC = 2Q, and zero fixed costs. How much is the resulting gain in total surplus?
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Consider the following market demand p= 20 - 0.02 Q where p is the price in $ or kilo and Q is the quantity demanded in kilo/ per week.The marginal cost of schedule is given by MC = 2 + 0.03 Q.
a. if this were a perfectly competitive market what would be the equilibrium price and quantity show your work?
b. if this were a monopolized market what would be the equilibrium price and quantity show your work?
c. what is the dead weight loss in the monopolized market give the number and show your work?
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- true or false In the case of natural monopolies, economists argue that production is more efficient with several smaller firms rather than one large firm.arrow_forwardThe single-price monopoly equilibrium is Pareto ineffcient and leads to a positive deadweight loss. However, monopolies also have certain benefits in terms of technical progress, innovation, unique products/services and fostering of entrepreneurship. Do you agreee with the view that monopolies should be heavily regulated by the government ? Or should governments intervene only as and when necessary ?arrow_forwardSuppose CLP Holdings Limited is a natural monopolist with constant marginal cost. Draw a diagram to indicate the profit-maximizing level of output, the profit-maximizing price, and the size of the profit. If the government wants to increase the market efficiency through price regulation, would you suggest the government setting the price equal to the firm’s marginal cost or its average total cost? Explain in detail with the diagram.arrow_forward
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