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Draw the demand curve, marginal revenue, and marginal cost curves from **Figure 9.6**, and identify the quantity of output the

Figure 9.6 Illustrating Profits at the HealthPill Monolpoly

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# Chapter 9 Solutions

Principles of Economics 2e

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Financial Accounting (12th Edition) (What's New in Accounting)

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- Review the graph at right. Monopoly 100- What is the unregulated monopoly price? $ (enter your response as a whole number) 90- MC What is the unregulated monopoly output? (enter your response as a whole 80 number) 70- P=$00 60- The total unregulated welfare (CS + PS) is $- (round your answer to the nearest penny) 50- 40 What is the optimal monopoly regulated price? $ (enter your response as a whole number) MCE$30 30- 20 The total regulated welfare (CS + PS) is $. (round your answer to the nearest penny) FQ=30 MR 50 60 70 80 90 100 Quantity 10 20 30 40 20 tv MacBook Air 80 DII DD F2 F3 F4 F6 F7 F8 F9 F10 F11 @ %23 2$ 2 3 4 8 { W E Y U P S D F G н J K > C V N M and command opti .. .- • V B
*arrow_forward*Suppose you are the owner of a firm that is an unregulated monopoly. You find that your marginal cost curve is: MC = 40 + 3Q where MC is dollar marginal cost and Q is output. Suppose also that the demand curve for your product is P = 100 - Q where P is product price and Q is output. If you want to maximize profit, what Q should you choose? Please show work.*arrow_forward*An unregulated natural monopoly bottles Mt. McKinley air, unique clean air that has no substitutes. The monopoly's total fixed cost is $30,000 a year and its marginal cost is 10 cents a can. The graph illustrates the demand for Mt. McKinley air. Draw the average total cost curve. Plot the four control points at the quantities 100,000, 200,000, 300,000, and 400,000. Label the curve. Draw a point at the new quantity and price if the regulator sets a price cap such that the monopoly breaks even. The number of cans produced sold its marginal cost. A. is; benefit; exceeds B. is not; benefit; exceeds OC. is not; revenue; is greater than D. is; revenue; equals the efficient quantity because the marginal from the last can 60- 50- 40- 30- 20 20 10- Price (cents per can) 0- ATC MC D $300 100 200 300 400 Quantity (thousands of cans per year) >>> Draw only the objects specified in the question. 500*arrow_forward* - Review the graph at right. Monopoly 100- What is the unregulated monopoly price? $ (enter your response as a whole number) MC 90- What area represents the consumer surplus for an unregulated monopolist? 80- 70- P= $60 60 What area represents the producer surplus for an unregulated monopolist? A, B, & C - What area represents the deadweight loss? 50- 40- D MC = $30 30- The welfare for the unregulated monopoly is V the welfare when optimal monopoly regulation is used. 20- 10- Q = 3OMR ó 10 20 30 40 50 60 70 80 90 100 Quantity 0- DEC dtv A 20 MacBook Air DII F11 F10 F4 F2 F3 & %23 %24 7 8. 3 4 { P Q W E R Y F G J K L A S D > C V M command option on command .. .- リ • V * CO
*arrow_forward*You are the manager of a monopoly. If the marginal cost of your product is $100 and the price elasticity of demand for your product is 3, then the markup of price over marginal cost you should set is equal to. (Round your answer to one decimal place.) (Round your answer to one decimal place.) If the price elasticity of demand is 6 rather than 3, the markup you should set is equal to Use your knowledge of the factors that affect the magnitude of the price elasticity of demand to explain the difference in the markups in your answers to the last two parts. O A. A smaller price elasticity of demand suggests that your good is a normal good, which allows you to set a higher markup. OB. A smaller price elasticity of demand suggests that there are many substitutes for your good, which allows you to set a higher markup. OC. A smaller price elasticity of demand suggests that there are few substitutes for a good, which allows you to set a higher markup. D. A smaller price elasticity of demand…*arrow_forward*An unregulated natural monopoly bottles Liquid Sunlight, a unique product with no substitutes. The monopoly's total fixed cost is $190,000 and its marginal cost is 30 cents a bottle. How many bottles of Liquid Sunlight does the monopoly sell and what is the price of a bottle of Liquid Sunlight? Is the monopoly's use of resources efficient? The graph shows the demand curve for Liquid Sunlight. Draw the marginal revenue curve. Label it MR. Draw the marginal cost curve. Label it MC. Draw a point at the monopoly's profit-maximizing quantity and price. 60 50- 40- 30- 20- 10- 0- Price and cost (cents per bottle) 0 D 0.5 1.5 2 Quantity (millions of bottles per year) >>> Draw only the objects specified in the question. 2.5*arrow_forward* - Review the graph at right. Monopoly What is the unregulated monopoly price? $ 60 (enter your response as a whole number) 100- 90- What is the unregulated monopoly output? 30 (enter your response as a whole number) MC 80- The total unregulated welfare (CS + PS) is $1800 (round your answer to the nearest penny) 70- 60- What is the optimal monopoly regulated price? $(enter your response as a whole number) 50- The total regulated welfare (CS + PS) is $. (round your answer to the nearest penny) 40- TMCE$30 30- 20- 10- 0- 10 Q#3 MR 20 30 40 50 60 70 80 90 100 Quantity O stv DEC 20 MacBook Air DII F10 FB F3 F4 FS F2 F1 # % & 1 2 3 4 5 7 8 9 { T Y P Q W E G H J K A > C V B command option tion command .. .- D.
*arrow_forward*10. A monopoly has a demand curve given by P = 20-Q and its cost function is TC = Q2+70. Find the monopoly’s quantity and price. What is this firm’s profit? Should this firm remain open or shut down in the SR? Why?*arrow_forward*A monopoly market is characterized by the profit maximizer, price maker, high barriers to entry, single seller, and price discrimination. The information on the table below is a typical monopoly firm. Use it to answer the questions that follow Output Price Total Cost 0 $100 $200 1 100 290 2 100 350 3 100 390 4 100 470 5 100 560 6 100 700 7 100 900 i. What is the profit maximizing or loss minimizing quantity of output of this firm to produce? Why? ii. What is the profit or loss at the profit maximizing or loss minimizing output level? iii. Should the firm shut down or remain in operation? Why? iv. Assuming this is a representative firm in the industry or market, given the profits or losses incurred, what can be expected to happen over time in the market?*arrow_forward* - Suppose a monopoly's price elasticity of demand equals-5 and the marginal cost of production equals $500.00. The profit-maximizing price is $ 625 (Enter a numeric response using a real number rounded to two decimal places.) What will be the firm's markup? When maximizing profit, the monopoly's markup is______percent. (Round your response to the nearest percent.)
*arrow_forward*Suppose a monopoly's price elasticity of demand equals -2 and the marginal cost of production equals $400.00. The profit-maximizing price is $ (Enter a numeric response using a real number rounded to two decimal places., What will be the firm's markup? When maximizing profit, the monopoly's markup is percent. (Round your response to the nearest percent.) 20 Mact 80 F1 F2 F3 F4 F5 F6 F7 @ 23 $ & 1 3 4 7 8 Q W E R Y*arrow_forward*Graphically show a monopoly firm that currently sells 250 units of output at a price of $60/unit, where the marginal revenue of the 250th unit is $40, the marginal cost of the 250th unit is $50, and the average total cost at 250 units is $60. [Hint: Based on the information given, is the quantity you’re asked to show the profit-maximizing quantity? Think about what has to be true for profit-maximization.] Based on the graph and assuming the firm attempts to profit maximize (and succeeds), what would happen to price, quantity, MR, MC, and ATC? (rise, fall, or stay the same?)*arrow_forward*

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