ECON MICRO (with MindTap, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
6th Edition
ISBN: 9781337408059
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 9, Problem 5P
To determine
Problem with monopoly, comparison of monopoly and
Concept Introduction:
A market with the single seller and large number of buyers is referred as
Expert Solution & Answer
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(a) If you are the owner of the only bookstore in a small town, do you have a
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sector provision of electricity.
QUESTION 8
Kim is a cook that makes really unique egg rolls and she is the only person selling these egg rolls. Assume Kim's demand is linear and
that she profit maximises.
Select the item from the list provided to make the following statements true:
Kim's egg roll business operates in a monopoly because
1. is less than
2. profit
3. there are close substitutes
4. is greater than
5. there is only one seller
6. dead weight loss
7. is equal to
8. she is a price taker
9. there are many sellers
Kim is profit maximising implying that she is producing at
where her marginal revenue
her
marginal cost of production.
✓ If Kim were to produce where her marginal cost intersects
the demand curve for her egg rolls, she would be
maximising
10. revenue
11. consumer surplus
12, is exactly twice of
(9) What a monopoly's ATC , Demand, MR and MC Looks like if the monopoly is operating with loss.
Chapter 9 Solutions
ECON MICRO (with MindTap, 1 term (6 months) Printed Access Card) (New, Engaging Titles from 4LTR Press)
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- What is a natural monopoly?arrow_forwardQuestion 2 Alice is the monopoly producer for DrinkMeTM, a magical potion that makes you shrink in size. Market demand for this potion is given by p = 60- 3Q and Alice's costs of production are C(q) = 12q. Please calculate the following quantities. %3D a) Monopoly price, quantity and profits b) The fair market price in perfect competition c) The welfare loss which occurs due to the monopolyarrow_forwardCompared to a competitive firm, a monopoly will ... (select all correct answers) A. produce an output where marginal revenue is lower than marginal cost B. charge a higher price □ C. produce greater quantities OD. be less efficientarrow_forward
- COURSE: MICROECONOMICS - MONOPOLY We appreciate a perfect competition market where there is a predetermined limit number of firms with 20 total firms.Each has the cost function such that: CTi = qi2 + 4qi + 3 where qi indicates numbers of firms (i = 20) The demand in the market is: Q = 100 - 4pa) What is the individual supply of each firm? (answered)b) What is the supply of the whole industry? (answered)c) Obtain the market equilibrium (answered)In the case where a new firm intended to enter a monopolist's market:d) What kind of legitimate entry barriers can the firm face understanding the nature of the market it wishes to enter?e) What type of anticompetitive barriers could the firm already in the market present? NOTE: a), b) and c) for perfect competition have been already answered by a tutor; please answer d) and e) questionsarrow_forwardThe McDonald's table shows information you found out about McDonald’s production capabilities and costs when operating as a monopoly. ( fill it out the table) As a monopoly, how much should McDonald’s charge for its hamburgers to maximize profit? What could McDonald’s do to create barriers that would prevent others from entering the markets and would make it harder for remaining hamburger shops to remain in the market?arrow_forwardWhich of the following are types of monopoly? (select all that apply) Small business O Conglomerate O Natural Big business O Artificialarrow_forward
- A natural monopoly refers to a monopoly that is defended from direct competition by a. Control over a vital input b. A government franchise c. A patent or copyright d. Economies of scale over a broad range of outputarrow_forward2) A monopoly faces a demand elasticity of -10 and marginal cost of $2, what is the optimal monopoly price? (Calculate using the monopoly pricing formula) What is the Lerner index?arrow_forward(Table) Suppose a monopolist faces the demand relationship shown in the table. If the marginal cost is $6, then the profit-maximizing output is (hint: Find marginal revenue) Quantity Demanded Price $10 $8 $7 $5 $3 $2 3\ 4. 5. 6. OA 4 units. O B. 3 units. OC.1 unit. OD.2 units.arrow_forward
- Give typing answer with explanation and conclusion The inefficiency (dead-weight loss) of a monopoly (as compared to perfect competition) indicates the amount by which Group of answer choices price exceeds marginal revenue at a particular output level. consumer welfare is increased by the monopolist. price exceeds marginal cost at a particular output level. marginal benefits exceed marginal cost for those units not produced by the monopolist but that would otherwise be produced in a competitive market. marginal costs exceed marginal benefits for those units not produced by the monopolist but that would otherwise be produced in a competitive market.arrow_forwardQuestion 5 The following figure describes the market demand curve of a monopoly market: 10 Price, cost 9 8 7 6 3 2 1 a. b. C. d. 5 10 15 20 25 30 35 D a). 45 50 55 60 65 70 75 80 85 quantity Draw the marginal revenue (MR) curve for the monopoly given the above market demand curve. If the monopoly firm can produce any output level with the extra cost $3 per unit, how would the marginal cost (MC) curve be? List the mathematical equation and draw the MC curve on the same figure of question The fixed cost for the monopoly company is $25. Find the optimal output level and the related profit/loss for it. There are two proposals concerning the market efficiency: Plan A: regulate the market price at $4. Plan B: allow and help the monopoly enforce the perfect price discrimination. If you represent consumers to vote for one plan, which one would you choose? Explain with proper calculation (Hint: consumers only care about their welfare).arrow_forwardQuestion 4 i. ii. iii. A monopoly can be recognized by certain characteristics that set it aside from the other market structures. Explain why a monopoly firm is a price-maker in microeconomics. The opponent of monopoly argued that the monopoly power will result to a social cost. Explain why. A perfectly competitive market has the opposite characteristics or conditions from the monopoly market, describe THREE (3) characteristics or conditions of the perfectly Competitive market structure.arrow_forward
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