Homework Answers
1. If the government breaks up the monopoly then the market becomes a perfect competition. In the perfect competition the firm hasn't got any market power , the firm is a price taker which is exactly opposite for the monopolist. In the perfect competition the price would be equal to the marginal cost and the firm would maximize the profit where the marginal revenue equals marginal cost.
.
Ans: The market will priduce 50 units of the commodity at a price of $60.
2.
Profit= ( P-ATC)Q
.
.
Ans: Profit equals $600.
3. The monopolist maximizes the profit where the marginal cost equals the marginal revenue.
Ans: Profit maximizing quantity: 30.
Profit maximizing price:80.
Add Answer to:
left side (vertical from top to bottom) 100,80,60,40,20
bottom (horizontal left to right 10,20,30,40,50,60,70)
40 Bo...
3. The following graph illustrates a monopoly market. MC = ATC Output The government intervenes in...
3. The following graph illustrates a monopoly market. MC = ATC Output The government intervenes in the market and regulates the monopolist to charge the perfectly competitive market price. That is, regulation forces the monopoly firm to behave as if it was a perfectly competitive firm. a. What price would the firm charge under regulation; i.e. what is the perfectly competitive market price be and why? (10 points) b. What output would the firm produce under regulation; i.e. what is...
Question 3 A monopolist faces a demand curve given by P = 105 - 30 where...
Question 3 A monopolist faces a demand curve given by P = 105 - 30 where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $15. There are no fixed costs of production. Hint: To answer the following questions, it may be helpful to draw a graph! What quantity should the monopolist produce in order to maximize profit? What price should the monopolist charge in...
A monopolist faces a demand curve given by P = 200-10Q
A monopolist faces a demand curve given by P = 200-10Q, where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $60. There are no fixed costs of production.A) What quantity should the monopolist produce in order to maximize profit?B) What price should the monopolist charge in order to maximize profit?C) How much profit will the monopolist make?D) What is the deadweight loss created by this monopoly...
1. What is a monopoly? Name 2 differences between a monopoly and a perfectly competitive market....
1. What is a monopoly? Name 2 differences between a monopoly and a perfectly competitive market. 2. What is the profit maximizing condition for a price-setting monopoly? 3. Show that MR follows the notion "same intercept, twice the slope" of demand. 4. Is a monopoly the most socially optimal market? How does a monopoly differ from a perfectly competitive market? Explain and show in a graph. What is the difference in welfare? 5. At what point would a monopoly decide...
Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram...
Include correctly labeled diagrams, if useful or required, in explaining your answers. A correctly labeled diagram must have all axes and curves clearly labeled and must show directional changes. If the question prompts you to "Calculate," you must show how you arrived at your final answer (a) Draw a correctly labeled graph for a monopoly and show each of the following. The profit-maximizing quantity, labeled QM (II) The profit maximizing price, labeled PM (b) Assume the monopoly now engages in...
7. How is monopoly different from perfect competition? 8. What is a barrier to entry? Give...
7. How is monopoly different from perfect competition? 8. What is a barrier to entry? Give some examples. 9. What is a natural monopoly? 11. What is predatory pricing? 14. In what sense is a natural monopoly “natural”? 15. How is the demand curve perceived by a perfectly competitive firm different from the demand curve perceived by a monopolist? 16. How does the demand curve perceived by a monopolist compare with the market demand curve? 17. Is a monopolist a...
15. Use the following figure for a firm in a perfectly competitive market. a What is the output that maximizes...
15. Use the following figure for a firm in a perfectly competitive market. a What is the output that maximizes the firm's profit? b. At the profit-maximizing output, calculate total revenue and total cost. C. If the firm maximizes profit, how much profit does it earn? d. What will likely happen to market demand or market supply in the long run? e. What will likely happen to the market price in the long run? Price (s) d = P =...
In the long run, all of the firms in a perfectly competitive industry will: exit the...
In the long run, all of the firms in a perfectly competitive industry will: exit the industry if price is greater than average total cost. produce at an output level at which average total cost equals marginal cost. earn an economic profit greater than zero. O produce an output level at which price is greater than average total cost. Which statement about the differences between monopoly and perfect competition is INCORRECT? A monopoly will charge a higher price and produce...
Given the following inverse demand and cost function, answer the questions below: a) Suppose barriers to entry exis...
Given the following inverse demand and cost function, answer the questions below: a) Suppose barriers to entry exist such that only one firm serves the market with no threat of entry. What will be the monopoly price, outcome, and profit? b) Suppose instead that perfect competition exists in this market. What will be the competitive price, market quantity Q, and competitive firm profit? c) Suppose two firms serve the market with no threat of entry. If the two firms compete...
A monopolist sells in two markets. The demand curve for her product is given by p1...
A monopolist sells in two markets. The demand curve for her product is given by p1 = 120 y1 in the first market; and p2 = 105 y2 2 in the second market, where yi is the quantity sold in market i and pi is the price charged in market i. She has a constant marginal cost of production, c = 10, and no fixed costs. She can charge different prices in the two markets. 1) Suppose the monopolist charges...
3. The following graph illustrates a monopoly market. MC = ATC Output The government intervenes in the market and regulates the monopolist to charge the perfectly competitive market price. That is, regulation forces the monopoly firm to behave as if it was a perfectly competitive firm. a. What price would the firm charge under regulation; i.e. what is the perfectly competitive market price be and why? (10 points) b. What output would the firm produce under regulation; i.e. what is...
Question 3 A monopolist faces a demand curve given by P = 105 - 30 where P is the price of the good and Q is the quantity demanded. The marginal cost of production is constant and is equal to $15. There are no fixed costs of production. Hint: To answer the following questions, it may be helpful to draw a graph! What quantity should the monopolist produce in order to maximize profit? What price should the monopolist charge in...
1. What is a monopoly? Name 2 differences between a monopoly and a perfectly competitive market. 2. What is the profit maximizing condition for a price-setting monopoly? 3. Show that MR follows the notion "same intercept, twice the slope" of demand. 4. Is a monopoly the most socially optimal market? How does a monopoly differ from a perfectly competitive market? Explain and show in a graph. What is the difference in welfare? 5. At what point would a monopoly decide...
15. Use the following figure for a firm in a perfectly competitive market. a What is the output that maximizes the firm's profit? b. At the profit-maximizing output, calculate total revenue and total cost. C. If the firm maximizes profit, how much profit does it earn? d. What will likely happen to market demand or market supply in the long run? e. What will likely happen to the market price in the long run? Price (s) d = P =...
In the long run, all of the firms in a perfectly competitive industry will: exit the industry if price is greater than average total cost. produce at an output level at which average total cost equals marginal cost. earn an economic profit greater than zero. O produce an output level at which price is greater than average total cost. Which statement about the differences between monopoly and perfect competition is INCORRECT? A monopoly will charge a higher price and produce...
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