Principles of Microeconomics
7th Edition
ISBN: 9781305156050
Author: N. Gregory Mankiw
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Question
Chapter 15, Problem 5CQQ
To determine
The causes of deadweight loss .
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
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
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
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
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. 11PA
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Similar questions
- 2. (True/False. Explain) Firms in perfect competition experience increase in short run economic profit if demand increases. 3. Differentiate between a price take and a price maker. 4. (True/False. Explain) A monopolist can convert the entire customer surplus into profit. 5. Provide examples of monopoly in the US market. How do they keep the deadweight loss low?arrow_forwardThere 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_forwardBlue INK is the only cabel service provider in Gazipur. The diagram below depicts the price, output and costs incurred by Blue INK. Use the graph to answer the following questions: [1/8, 3:26 PM] Mahin: 1. What is the Total revenue generated by Blue INK at the profit maximizing level of output? 2. If the market turns into a Monopoly market again, what will be the total deadweight loss created?arrow_forward
- The 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_forwardin monopoly, market power permits you to price above MC. What limits how high a price you can set? a. government b. Depends on the demand elasticity for the product c. Depends on the supply elasticity of the product d. no limitarrow_forwardYou 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_forward
- (True/False. Explain) A monopolist can convert the entire customer surplus into profit. Provide examples of monopoly in the US market. How do they keep the deadweight loss low?arrow_forward1.Some monopolies are regulated by setting a price that a monopolist cannot exceed over a specified period of time. This is called: A)price cap regulation B)regulatory capture C)antitrust laws D) cost-plus regulation 2.Let's say that the equilibrium salary for professors is $70,000/year. If universities pay an average of $90,000/year, we can expect a ___________ of professors. A)shortage B)surplus C)monopoly D)union 3.If college education becomes a requirement for working in a fast-food establishment, we may experience a _____________ in the supply of potential fast-food workers. A)increase B)rightward shift C)decrease D)surge 4.Minimum wage laws are examples of price floors, where an employer is: A)Not allowed to pay wages higher that what is set by the law B)Should pay all workers the minimum wage set by the law C)Not allowed to pay wages lower than what is set by the law D)Not allowed to hire people who asks for wages higher than what is set by the…arrow_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_forward
- Economics .] A local monopoly, Bernie’s Lemon Fizz, sells its Lemon Fizz to the general public in its storefront and at a local sports arena. The demand function for its own store is Pg = 10 - 0.1qG and demand for the sports arena is Ps= 20 - 0.05 qS The total cost of supplying Lemon Fizz to each market is TC(Q) = Q + 150 where Q = qG + qS What is the optimal price Bernie will sell his Lemon Fizz for in each market? What are Bernie’s profit in each market? Why the price discrepancy? Is it realistic for Bernie to be able to price discriminate in these two markets? Explain.arrow_forwardQuestion 6 Give an example of a government-created monopoly. Is creating this monopoly necessarily bad public policy? Explain.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_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Essentials of Economics (MindTap Course List)EconomicsISBN:9781337091992Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of Economics, 7th Edition (MindTap Cou...EconomicsISBN:9781285165875Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of Microeconomics (MindTap Course List)EconomicsISBN:9781305971493Author:N. Gregory MankiwPublisher:Cengage Learning
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningPrinciples of MicroeconomicsEconomicsISBN:9781305156050Author:N. Gregory MankiwPublisher:Cengage Learning
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics, 7th Edition (MindTap Cou...
Economics
ISBN:9781285165875
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Microeconomics (MindTap Course List)
Economics
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Principles of Microeconomics
Economics
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:Cengage Learning