Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 9, Problem 3MC
To determine
Economic profit.
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Use the cost and revenue data to answer the questions.
Quantity
Price
Total revenue
Total cost
10
90
900
675
15
80
1200
825
20
70
1400
1025
25
60
1500
1250
30
50
1500
1500
35
40
1400
1850
If the firm is a monopoly, what is marginal revenue when the quantity is 25?
MR=
What is the marginal cost when quantity is 15?
MC=
If this firm is a monopoly, at what quantity will marginal profit be $0.00?
Quantity=
If this is a perfectly competitive market, which quantity will be produced?
Quantity=
Monopoly firms are a lot more profitable than perfectly competitive firms. The primary reason is that the monopoly firm charges a price that is greater than marginal cost at the profit maximizing quantity. Explain this statement with a graph. Specifically, explain how the profit maximizing quantity and price are determined.
I am learning about pure competition in short and long run and pure monopoly in intro to microeconomics. How would a pizzeria in a densely populated area with 20 to 50 competitors thrive in a pure short competition market compared to a pure long competition market? As well as in a pure monopoly market.
Chapter 9 Solutions
Managerial Economics: A Problem Solving Approach
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Similar questions
- How is monopoly different from perfect competition?arrow_forwardQuestion 3:Show a Monopoly earning super normal profit and explain what are the costs of having monopoly in the economy. How can government prevent monopoly in the market?arrow_forwardWhat is NOT a common reason for the development of a monopoly? options: All other answers are in fact reasons for monopoly - so none of them is correct A patent Being very good, way better than others, in producing the good (for example, Google in search) Government created monopoliesarrow_forward
- Draw the graph for a monopoly earning a positive economic profit. Suppose the government institutes a per unit tax on the good produced by the monopoly (consider the impact it will have on the cost curves). On the graph, show how this will affect the monopoly’s profit maximizing level of output and the price charged by the monopoly. Draw and Label Price Axis, Quantity Axis, Demand Curve, Marginal Revenue Curve, Marginal Cost Curve, Average Total Cost Curve, New Marginal Cost Curve, New ATC Curve, Qm, MR=MC, MR=MC1 Qm1, Pm, Pm1, ATC point, ATC1 point, Deadweight Loss, Total Revenue, Total Cost, Profitarrow_forward3.1. Fill out the table below. Unit Marginal Marginal Quantity (Q) Price (P) Total Revenue (TR) Fixed Cost (FC) Variable Cost (VC) Total Cost (TC) Profit Cost Revenue 14 $10 $3 $43 15 $10 $51 16 $10 $60 17 $10 $70 18 $10 $81 3.2. Is the table above pertaining to a perfectly competitive firm or monopoly? How can you tell?arrow_forwardMarket Structure a. In the short run, if a perfectly competitive firm produced at the quantity of productive efficiency, would it generate the highest profit level possible? Why or why not? b. Draw a graph to represent a natural monopoly and describe the circumstances that would permit natural monopoly to exist. Would it be wise for government to break up natural monopolies? Give some examples of natural monopoliesarrow_forward
- Blue 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_forwardAlso explain why a monopoly firm, choose not to produce at its full capacity? How does monopoly affect society’s well-being? What is price discrimination and how it helps the firm and the consumersarrow_forwardWhat 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 wouldarrow_forward
- Give an example of a government-created monopoly. Is creating this monopoly necessarily bad public policy? Explain. Define natural monopoly. What does the size of a market have to do with whether an industry is a natural monopoly? Give two examples of price discrimination. In each case, explain why the monopolist chooses to follow this business strategy. What are the three reasons that a market might have a monopoly? Give two examples of monopolies and explain the reason for each.arrow_forwardGoogle dominates online search options and advertising. Some contend Google is a monopoly. First, consider competition and answer these questions: Is Google protected by a barrier to entry, and If so, which barrier(s)? Is there a viable substitute for Google? Second, consider whether Google is a monopoly or not. How does Google’s control of the market influence market price and market quantity? If Google is a monopoly, how would breaking up affect the market price and market quantity? How do we test these hypotheses?arrow_forward
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