EP ECONOMICS,AP EDITION-CONNECT ACCESS
20th Edition
ISBN: 9780021403455
Author: McConnell
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Question
Chapter 19, Problem 4DQ
To determine
The antitrust laws and discussions within the monopoly case.
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Students have asked these similar questions
Price (dollars per unit)
30
24
21
18
16
12
O
4
$12 to $18.
$18 to $24.
$12 to $18.
a
$12 to $24.
8
MR
b
12
LRAC (inflated)
LRAC
MC
In the above figure, if the natural monopoly is regulated using an average cost pricing rule, but the firm can pad its costs and make
the regulator believe its costs are LRAC (inflated), then the price the firm charges will increase from
D₁
20
16
Quantity (millions)
Exhibit 9-4: A Monopoly
Total
Quantity
Total Fixed
Variable
Price
Demanded Cost
Cost
$100
$30
$0
90
1
$30
20
80
$30
48
70
3
$30
78
60
$30
110
50
$30
150
Refer to Exhibit 9-4. At an output level of 5 units, the monopolist earns a total profits
of about
O $100.00
O $102.00
O
$82.00
OS70.00
%24
2.
4.
5.
QUESTION 18
Consider a monopoly, where the demand curve is given by P = 100-Q, marginal revenue is given by MR = 100-20, total cost is given by TC=10+20, and marginal
cost is given by MC = 10.
Solve for the monopolist's profit.
O 2375
O -2375
O 2462
O -2462
Chapter 19 Solutions
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Similar questions
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- Natural Monopoly Regulation MC P2 АТС P1 D Q3 Q2 Q, Quantity Using the graph above, what price is charged if marginal-cost price regulation is imposed on the natural monopoly firm? O P3 Below P2 but above P3 O P1 D Below P3 but above P2 D P2 Pricearrow_forwardSuppose that a monopolist faces linear demand given by Q(p)=1000-10p The monopolist also pays a marginal cost of $5 for each unit produced. What is the optimal price that the monopolist will charge to maximize its profits? O47.5 50 500 52.5arrow_forwardA monopolist has variable costs of VC = q² and no fixed costs and faces a demand curve of P = 24 - q, where P is price and q the quantity sold. What is the monopolist's profit? 072 O 64 None of the other answers is correct. O 48 O 36arrow_forward
- (Figure: Pay Per View Movies on Xfinity Cable) Use Figure: Pay Per View Movies on Xfinity Cable. The figure shows the demand and marginal revenue curves for on-demand movie rentals on Xfinity. Assume that marginal cost and average cost are constant at $20. If the cable company is a monopoly, how much producer surplus is there when the monopolist maximizes profit? Price, Costs, Marginal Revenue O $180 O $90 O $0 O $20 $100 90 80 70 60 50 40 30 20 10 0 MR 1 2 3 4 5 6 7 8 9 Quantity (Thousands of subscriptions)arrow_forwardQuestion 14 of 30 What is a natural monopoly? A monopoly that faces a high fixed cost and low marginal costs so that the average total cost curve slopes downward. A market in which there is only one firm. A monopoly resulting from one firm's exclusive ownership of a natural resource required to produce a good. O A monopoly that results from government issuing patents. Which of the firms is most likely to be a natural monopoly? O A firm that owns nearly all of the diamond mines in the world. A restaurant that is unable to practice price discrimination and must charge all consumers the same price. O Municipal Power Light, the local supplier of electricity. A pharmaceutical company that has the exclusive right to sell a patented drug. 46°F aarrow_forwardВ 10 9 4 - 5 3 12 15 20 22 What is the quantity by shape in a monopoly market? a) 5 B) 15 C) 22 OD) 12 O TO) 20arrow_forward
- of aboul $92,00 Exhibit 9-4: A Monopoly Total Quantity Total Fixed Variable Price Demanded Cost Cost $100 $20 $0 90 1 $20 20 80 $20 48 70 $20 78 60 4 $20 110 50 $20 150 Refer to Exhibit 9-4. At an output level of 3 units, the monopolist earns a total profits of about O $80.00 $92.00 O $112.00 O$110.00 2. 3. 5.arrow_forward(Figure: The Profit-Maximizing Output and Price in the Monopoly Diamond Market) Use Figure: The Profit-Maximizing Output and Price in the Monopoly Diamond Market. Assume that there are no fixed costs and that AC = MC = $200. The monopolist who can perfectly price discriminate will produce an output of diamonds. Price, cost, marginal revenue of diamond $1,000 O 20 06 O 16 00 800 600 400 200 0 -200 -400 B A MR 8 10 C MC D 16 20 Quantity of diamondsarrow_forwardA local magic shop has a monopoly on the production of magic wands. Each customer wants only one magic wand, and the table below shows each customer's willingness to pay. The marginal cost of producing a wand is $21 no matter how many are produced. Quantity demanded Price per wand ($) LO 01 2 3 4 5 6 78 30 27 24 21 18 15 12 96 If the shop can charge only a single price, it will charge $ wands. If the firm practices perfect price discrimination, it will sell a total of earn a profit of $| and sell wands andarrow_forward
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