Microeconomics Plus Myeconlab With Pearson Etext (1-Semester Access)
6th Edition
ISBN: 9780134435053
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Chapter 15, Problem 15.3.9PA
To determine
Setting
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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.)
When selling downloadable software, e-books, and music streaming platforms, the marginal cost of making one more unit is
basically zero. The average total cost is currently $1 per book. If a monopoly is operating in this market and is maximizing profits,
marginal revenue is
Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer.
a
Greater than $0
Less than $0
$0
d
$1
e
There is not enough information to answer this question.
Chapter 15 Solutions
Microeconomics Plus Myeconlab With Pearson Etext (1-Semester Access)
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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- Suppose 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_forwardThe graph depicts the market for cable where there is one natural monopoly; AC represents average (total) cost, D represents market demand, and MR represents marginal revenue. Assume that the marginal cost is equal to 0. Suppose that before the cable company lays any cable, the government decides to regulate the monopoly by setting the price. What is the lowest price that regulators can impose while ensuring that the cable company enters the market? 2 What will a monopolist charge in the absence of any regulation? 4 Price $10 9 8 7 6 5 4- 3- تیا 2 1 0 1 AC 2 MR نیا D 4 5 6 7 8 9 10 Households (in millions)arrow_forward
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