ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
4th Edition
ISBN: 9781285423548
Author: William A. McEachern
Publisher: Cengage Learning
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Chapter 9, Problem 5.7PA
To determine
The reasons for smaller or larger welfare loss of a
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Question 25.25. a.) What is the relationship between economies of scale and a natural monopoly? b.) Why is the level of output at which marginal revenue equals marginal cost the profit-maximizing output?
7
Chapter Subject: Monopoly
Should Amazon be regulated by the U.S. Government? Explain.
Q28
If a single-price monopoly is presently producing an output at which marginal cost is less than marginal revenue, it can increase its profits by...
a.
Reducing output and keeping prices unchanged.
b.
Expanding output and raising price.
c.
Expanding output and lowering price.
d.
Reducing output and raising prices.
e.
Reducing barriers to entry.
Chapter 9 Solutions
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
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- What is a bilateral monopoly?arrow_forward1. Do you think Amazon is a monopoly? Explain. 2. Should Amazon be regulated by the U.S. Government? Explain.arrow_forwardSg3 Economics An industry produces its product, Scruffs, at a constant marginal cost of $50. The market demand for Scruffs is equal to Q=75,000−500PQ What is the value to a monopolist who is able to develop a patented process for producing Scruffs at a cost of only $45? $_____________ If the industry producing Scruffs is purely competitive, what is the maximum benefit that an inventor of a process that will reduce the cost of producing Scruffs by $5 per unit can expect to receive by licensing her invention to the firms in the industry? $________________arrow_forward
- Questions 1-3 are answered just need 4-6. Thank you! Draw the graph. If the monopoly is a price-discriminating monopoly charging some customers P1= $950 and other customers P2=$400, then: 1. At the price P1= $950, the monopoly will sell a quantity Q1 = ______ 2. At the price P2= $400, the monopoly will sell a quantity Q2 = ______. (Obs: calculation required here!)3. Total quantity sold at both prices is Q3 = Q1 + Q2 = ___________. 4. The profit earned from selling the quantity Q1 at P1 is Profit1 = ____________________(identify the area on the graph and calculate it).5. The profit earned from selling the quantity Q2 at P2 is Profit2= ____________________(identify the area on the graph and calculate it).6. The total profit earned by the price discriminating monopolist is Profit = Profit1 + Profit2 = _______.arrow_forward16. Relative to a competitively organized industry, a monopoly is more likely to produce Select one: a. Less output, charges higher price, and earns economic profits. b. Less output, charges lower prices, and earns only a normal profit. c. More output, charges higher prices, and earns economic profits. d. Less output, charges lower prices, and earns economic profits.arrow_forwardH11. Assume a firm in a competitive market is outputting 500 units and sells each unit for 4 dollars. The average total cost is 3 dollars. What is the total profit? Suppose when a monopoly charges 5 dollars, it sells 2 units of output. When it charges 4 dollars it sells 3 units of output. What is the Marginal Revenue of the 4th output?arrow_forward
- Question 23 The deadweight loss that arises from a monopoly is a consequence of the fact that the monopoly Group of answer choices quantity is lower than the socially-optimal quantity. price equals marginal revenue. price is the same as average revenue. earns positive profits.arrow_forward7 please quickly thanks !!! Assume a monopoly is producing at 10 units of output, and marginal revenue is $2.00 and marginal cost is $4.00. The monopoly could maximize profits or minimize losses by: A. Decreasing output and decreasing price. B. Increasing price and decreasing output. C. Increasing price and keeping output constant. D. Keeping price constant and increasing output.arrow_forward6. Define price fixing, price discrimination, and tying contracts, and explain which are strictly prohibited, which are permitted, and why.arrow_forward
- 19- A barrier to entry is ________________. a. illegal in most markets. b. none of these. c. anything that protects a firm from the arrival of new competitors. d. freedom to enter and exit.arrow_forward10 If the government determines that a natural monopoly must set a price equal to its average cost plus 10%, this is an example of Question 22 options: Cost-plus regulation Price cap regulation Restrictive prices Antitrust lawarrow_forward6) Why has global oil and gas consumption increased in recent decades, despitediscounting?a. Human population has increased.b. Exploration has made new reserves available.C.People have become richer, which has increased demand for oil and gas.d. Only a and c are correct.e. All of the above (a, b, and c) are correct.7) Without regulation, an industry that is a natural monopoly will tend to have:a. higher prices than is efficient, especially if demand is elastic.b. higher prices than is efficient, especially if demand is inelastic.C. higher consumpton than is efficient, especially if demand is elastic.d. higher consumption than is efficient, especially if demand is inelastic.arrow_forward
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