Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN: 9781305971493
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 15, Problem 4CQQ
To determine
The level of output and price under monopoly firm.
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Students have asked these similar questions
Is a monopoly always bad for society?
a. No. For example, patents on medications create monopolies, and increase the price and reduce the quantity sold, but without them, no one would take the high costs of developing new drugs and the quantity will be... zero!
b.Monopoly is not bad if its owner gives back to society in charity.
c.Yes, Monopoly is always bad
d. None of the other answers is correct
What is the dead weight loss?
a.The loss in welfare due to the monopoly producing a LARGER amount than a competitive market would
b. None of the other answers is correct
c.A new weight loss system
d.The loss in welfare due to the monopoly producing a SMALLER amount than a competitive market would
2
A monopoly sells its goods in the United States, where the elasticity of demand is -2, and in Japan, where the elasticity of demand is -5. Its marginal cost is $10. At what price does the monopoly sell its goods in each country if resale is impossible?
Chapter 15 Solutions
Principles of Microeconomics (MindTap Course List)
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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- There is a market with monopoly conditions with Q= 100-P (demand) and MC-AC-20. The monopoly price and quantity levels are Pm= 60 and Qm-40, meanwhile the equilibrium of competition is Pe=20 and Qe=80. Calculate: a. Draw the condition curve and show the CS, PS and regions DWL? b. Value of Consumer Surplus (CS) and Producen Surplus (PS) at the time of competition? c. Value of Consumer Surplus (CS), Producen Surplus (PS) and Deadweight Loss (DWL) at the time of monopoly?arrow_forwardA) Some industries have found that the best way to bring their product to market is via a two sided market, where advertisers form the other side of the market. Why will there still be a deadweight loss in this kind of market, and what ways could the firms in the industry behave to reduce the deadweight loss?B) Show with a diagram why first degree price discrimination eliminates the deadweight loss in general.C) What three conditions have to be satisfied before a company can engage in price discriminationarrow_forwardA monopoly barber sells haircuts to adults for 30 and A monopoly barber sells haircuts to adults for $30 and to children for $10. Let ηΑ represent adults’ elasticity of demand for haircuts and let ηC represent children’s elasticity of demand.a. Explain why |ηΑ| and |ηC| must both be greater than 1.b. Find a formula for ηA in terms of ηC.c. What is the largest possible value for |ηΑ|? A monopoly barber sells haircuts to adults for 30 andarrow_forward
- You are a monopolist making a durable good, the widget. Some of your customers have started to sell their used widgets to others. Assume the used and new widgets are perfect substitutes, but with 2 used equivalent to one new widget. a.) what effect would an increase in cost for new widgets have on the price of new and used widgets? b.) You consider trying to get the used widgets market made illegal. If this were done perfectly, how would it affect your monopoly's price and profits? show this graphically and in wordsarrow_forwardThe accompanying diagram depicts a monopolist whose price is regulated at $10 per unit. Use this figure to answer the questions that follow. a. What price will an unregulated monopoly charge?$ b. What quantity will an unregulated monopoly produce?unitsc. How many units will a monopoly produce when the regulated price is $10 per unit?unitsd. Determine the quantity demanded and the amount produced at the regulated price of $10 per unit. Is there a shortage or a surplus?Quantity demanded: units Amount produced: unitsThere is: (Click to select) a shortage neither a shortage nor a surplus a surplus .e. Determine the deadweight loss to society (if any) when the regulated price is $10 per unit.$ f. Determine the regulated price that maximizes social welfare. Is there a shortage or a surplus at this price?$ There is (Click to select) neither a surplus nor a shortage a surplus a shortage at this price.arrow_forwardOnly typed answer and don't use chatgpt . B) A monopoly has two production plants with cost functions C1 = 50 + 0.1Q12 and C2 = 30 + 0.05Q22. The demand it faces is Q = 500 - 10P. What is the profit-maximizing price?arrow_forward
- The accompanying diagram depicts a monopolist whose price is regulated at $10 per unit. Use this figure to answer the questions that follow. a. What price will an unregulated monopoly charge? b. What quantity will an unregulated monopoly produce? c. How many units will a monopoly produce when the regulated price is $10 per unit? d. Determine the quantity demanded and the amount produced at the regulated price of $10 per unit. Is there a shortage or a surplus? e. Determine the deadweight loss to society (if any) when the regulated price is $10 per unit. f. Determine the regulated price that maximizes social welfare. Is there a shortage or a surplus at this price?arrow_forwardWhen does a company officially become a monopoly? a. when it controls more than 25 percent of the output of a certain product b. when the government decides the company is a threat to the national economy c. when a company controls the output for a marketable product without meaningful competition d. when a company controls more than 50 percent of the output of a productarrow_forwardSeema can sell 10 sweaters for $70 each, 20 sweaters for $60 each, 30 sweaters for $50 each, 40 sweaters for $40 each, and 50 sweaters for $30 each. Her marginal cost of production is constant at $30 for each additional unit (or sweater) produced. If she behaves like a monopolist, what is the number of sweaters she will sell? a. 20 b. 30 c. 40 d. 50arrow_forward
- d. Find the deadweight loss due to monopolies in parts b. and c.?arrow_forwardThe deadweight loss from monopoly arises becausea. the monopoly firm makes higher profits than acompetitive firm would.b. some potential consumers who forgo buying thegood value it more than its marginal cost.c. consumers who buy the good have to pay morethan marginal cost, reducing their consumersurplus.d. the monopoly firm chooses a quantity that failsto equate price and average revenue.arrow_forwardQuestion 6 Give an example of a government-created monopoly. Is creating this monopoly necessarily bad public policy? Explain.arrow_forward
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