Microeconomics, Student Value Edition (6th Edition)
6th Edition
ISBN: 9780134125756
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 15, Problem 15.3.9PA
To determine
Setting price in
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Exercise 3.6.
Why is there a social cost to monopoly power? If the gains to producers from monopoly
power could be redistributed to consumers, would the social cost of monopoly power be
eliminated? Explain briefly.
Suppose a cable company provides cable service to a small town. The total revenue, marginal revenue, total cost, and marginal cost of providing various quantities of cable subscriptions (units in
thousands per month) are presented in the table below.
Quantity
0
1
2
3
4
5
6
Price
202
200
198
196
194
192
190
Total Revenue
$0
200
396
588
776
960
1140
Assume the local cable company is a monopoly. To maximize profits, the monopoly should produce
At that level of output, the cable company will earn economic profits of $
(thousand per month).
Marginal Revenue
200
196
192
188
184
180
Total Cost
0
180
270
330
420
660
960
Marginal Cost
180
90
60
90
240
300
(thousand) units. (Enter a numeric response using an integer.)
Ch
Suppose that there are only three types of fruit sold in the United States. Annual sales are 1,200,000 tons of blueberries, 5,400,000
tons of strawberries, and 12,000,000 tons of bananas. Suppose that of those total amounts, the Sunny Valley Fruit Company sells
1,100,000 tons of blueberries, 900,000 tons of strawberries, and 9,200,000 tons of bananas.
Instructions: Round your answers to two decimal places.
a. What is Sunny Valley's market share if the relevant market is blueberries?
percent
If a court applies the "90-60-30 rule" when considering just the blueberry market, would it rule that Sunny Valley is a monopoly?
(Click to select)
b. What is Sunny Valley's market share if the relevant market is all types of berries?
percent
Would the court rule Sunny Valley to be a monopolist in that market?
Chapter 15 Solutions
Microeconomics, Student Value Edition (6th Edition)
Ch. 15 - Prob. 15.1.1RQCh. 15 - Prob. 15.1.2RQCh. 15 - Prob. 15.1.3PACh. 15 - Prob. 15.1.4PACh. 15 - Prob. 15.1.5PACh. 15 - Prob. 15.1.6PACh. 15 - Prob. 15.2.1RQCh. 15 - Prob. 15.2.2RQCh. 15 - Prob. 15.2.3RQCh. 15 - Prob. 15.2.4RQ
Ch. 15 - Prob. 15.2.5PACh. 15 - Prob. 15.2.6PACh. 15 - Prob. 15.2.7PACh. 15 - Prob. 15.2.8PACh. 15 - Prob. 15.2.9PACh. 15 - Prob. 15.2.10PACh. 15 - Prob. 15.2.11PACh. 15 - Prob. 15.2.12PACh. 15 - Prob. 15.2.13PACh. 15 - Prob. 15.2.14PACh. 15 - Prob. 15.3.1RQCh. 15 - Prob. 15.3.2RQCh. 15 - Prob. 15.3.3RQCh. 15 - Prob. 15.3.4PACh. 15 - Prob. 15.3.5PACh. 15 - Prob. 15.3.6PACh. 15 - Prob. 15.3.7PACh. 15 - Prob. 15.3.8PACh. 15 - Prob. 15.3.9PACh. 15 - Prob. 15.3.10PACh. 15 - Prob. 15.4.1RQCh. 15 - Prob. 15.4.2RQCh. 15 - Prob. 15.4.3PACh. 15 - Prob. 15.4.4PACh. 15 - Prob. 15.4.5PACh. 15 - Prob. 15.4.6PACh. 15 - Prob. 15.4.7PACh. 15 - Prob. 15.4.8PACh. 15 - Prob. 15.5.1RQCh. 15 - Prob. 15.5.2RQCh. 15 - Prob. 15.5.3RQCh. 15 - Prob. 15.5.4PACh. 15 - Prob. 15.5.5PACh. 15 - Prob. 15.5.6PACh. 15 - Prob. 15.5.7PACh. 15 - Prob. 15.5.8PACh. 15 - Prob. 15.5.9PACh. 15 - Prob. 15.5.10PACh. 15 - Prob. 15.5.11PACh. 15 - Prob. 15.5.12PACh. 15 - Prob. 15.5.13PA
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- The producer of natural gas is a natural monopoly. The graph illustrates the market for natural gas. When the government regulates the company by imposing an average cost pricerule, the price per household per month is _______.arrow_forwardSuppose that Comcast has a cable monopoly in Philadelphia. The following table gives Comcast's demand and costs per month for subscriptions to basic cable (for simplicity, we keep the number of subscribers artificially small). Total Revenue Marginal Revenue Marginal Total Price Quantity Cost Cost 68 3 204 144 64 4 256 52 172 28 60 5 300 44 204 32 56 336 36 240 36 52 7 364 28 280 40 48 8 384 20 324 44 Suppose the local government imposes a $97 per month tax on cable companies. What will Comcast do? (Assume fixed costs equal $60.) O A. Comcast should produce 6 units in the short run and shut down in the long run. B. Comcast should shut down in the short run and in the long run. c. Comcast should shut down in the short run and produce 6 units in the long run. D. Comcast should produce 6 units in the short run and in the long run. O E. None of the above. Suppose that the flat per-month tax is replaced with a tax on the firm of $16 per cable subscriber. (Assume that Comcast will sell only…arrow_forwardImagine that the Australian national rugby union has exclusive rights to organize the games played by the national team. Rugby AU decides that the next match, between the Wallabies and the All Blacks, will be hosted at the Marvel Stadium in Melbourne. Rugby AU has no fixed costs for organizing the game, but it must pay a marginalcost MC of $20 per seat to the owners of the Marvel Stadium. Two types of tickets will be sold or the game: concession and full fare. Based on any official document that attests to their age, children and pensioners qualify to purchase concession tickets that offer a discounted price; everyone else pays the full fare. The demand for full-fare tickets is QF(P) = 120 – 2P. The demand for concession tickets is QC(P) = 80 – 2P. Q)Suppose that Rugby AU becomes unable to verify the age of its customers; thus, the formerly distinct full fare and concessional ticket markets must be combined/merged in one single market. First, write the equation of the merged demand and…arrow_forward
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