PRINC OF ECONOMICS W/ APLIA
7th Edition
ISBN: 9781305306295
Author: Mankiw
Publisher: CENGAGE L
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Question
Chapter 15, Problem 2QR
To determine
The reason for the existence of natural monopoly in the market.
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A small town is served by many perfectly competing supermarkets, which have constant marginal cost.
a. Using a diagram of the market for groceries, show the (long-run) equilibrium price and quantity.
b. Mark the deadweight loss in the picture and explain what it is.
c. Show the consumer and producer surplus in the figure, and explain what these terms mean.
The table shows the demand curve for monster trucks. There are two monster truck producers. For simplicity, assume that the cost of producing a monster truck is zero. (AC=0, FC=0)
Q demanded
Price
1
$18
2
$16
3
$14
4
$12
5
$10
6
$9
7
$7
8
$6
9
$5
Assume the two producers initially collude to maximize profits, splitting production and profits evenly.
What price will they charge?
$___________
What is the total quantity produced?
__________monster trucks
What are the profits for each firm?
$___________
The table shows the demand curve for monster trucks. There are two monster truck producers. For simplicity, assume that the cost of producing a monster truck is zero. (AC=0AC=0, FC=0FC=0)
Q demanded
Price
11
$18$18
22
$16$16
33
$14$14
44
$12$12
55
$10$10
66
$9$9
77
$7$7
88
$6$6
99
$5$5
Assume the two producers initially collude to maximize profits, splitting production and profits evenly.
What price will they charge?
$
What is the total quantity produced?
monster trucksmonster trucks
What are the profits for each firm?
$
If one of the producers produces an extra unit to get higher profits, what is the new market price?
$
What are the profits for this firm when it breaks the agreement?
$
What are the other firm's profits after the agreement is broken?
Chapter 15 Solutions
PRINC OF ECONOMICS W/ APLIA
Ch. 15.1 - Prob. 1QQCh. 15.2 - Prob. 2QQCh. 15.3 - Prob. 3QQCh. 15.4 - Prob. 4QQCh. 15.5 - Prob. 5QQCh. 15 - Prob. 1CQQCh. 15 - Prob. 2CQQCh. 15 - Prob. 3CQQCh. 15 - Prob. 4CQQCh. 15 - Prob. 5CQQ
Ch. 15 - Prob. 6CQQCh. 15 - Prob. 1QRCh. 15 - Prob. 2QRCh. 15 - Prob. 3QRCh. 15 - Prob. 4QRCh. 15 - Prob. 5QRCh. 15 - Prob. 6QRCh. 15 - Prob. 7QRCh. 15 - Prob. 8QRCh. 15 - Prob. 1PACh. 15 - Prob. 2PACh. 15 - Prob. 3PACh. 15 - Prob. 4PACh. 15 - Prob. 5PACh. 15 - Prob. 6PACh. 15 - Prob. 7PACh. 15 - Prob. 8PACh. 15 - Prob. 9PACh. 15 - Prob. 10PACh. 15 - Prob. 11PACh. 15 - Prob. 12PA
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