Use a diagram to illustrate the case of a monopoly that is making a positive economic profit or monopoly rent and explain how this may affect the functional distribution of income (10 marks)
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Use a diagram to illustrate the case of a monopoly that is making a positive economic...
(a) Illustrate in a diagram an equilibrium position of a profit-making monopolist. (70 marks) (b) Is monopoly always undesirable? Explain. (30 marks)
Q1. Water supply in small towns is a natural monopoly making an economic loss. Draw a diagram clearly identifying an economic loss for this monopoly and explain how the government can address the issue of market failure in this case. Q2. Using a diagram, explain why the government doesn’t want competition in urban water supply (hint: LRAC). Q3. Use a demand and supply diagram to explain what happens to the equilibrium quantity and the equilibrium price of bicycles if the...
Suppose demand in a market is P 120 Q 240 2P This is a monopoly market, where MC = 30. There are no fixed costs. (a) Illustrate demand, marginal cost and marginal revenue in a figure (b) What is the profit-maximizing quantity? Explain why. How big is the profit? (e) How large is the socio-economically optimal quantity? Explain why. How big is the loss of welfare if you instead choose the quantity that maximizes the profits of the monopoly company?...
QUESTION 6 The diagram depicts the market situation for a monopoly pastry shop called BakeStop. Use the diagram to answer the following question Price 24 20 40 60 80 100 120 140 Quantity How much profit does BakeStop earn? Show and explain your work.
QUESTION 3 3.1. Use a diagram to explain how a decrease in government spending will affect the level of income in the Keynesian model. (Explanation) 3.2. Use a diagram to explain how an increase in taxes will affect the level of income in the Keynesian model. (Explanation) 3.3. South Africa experienced a severe decline in real gross domestic production during the last quarter of 2008 and the two quarters of the first half of 2009. Use an AD-AS model to...
2. (12 marks) Use a AD/AS diagram to illustrate the use of expansionary monetary policy to close an expansionary gap. a. Label the axes. b. Label the lines. And show c. Show the new AD line after the expansionary monetary policy is applied. d. Briefly explain what your diagram shows. e. Explain what monetary policies impact. the expansionary gap with the LRAS. RAS SRAS
2. (12 marks) Use a AD/AS diagram to illustrate the use of expansionary monetary policy to close an expansionary gap. a. Label the axes. b. Label the lines. And show the expansionary gap with the LRAS c. Show the new AD line after the expansionary monetary policy is applied. d. Briefly explain what your diagram shows. e. Explain what monetary policies impact. LRAS SRAS Poh t AD2 recessiona
Use the IS/LM/PC model diagram to illustrate how a reduction in the oil price might affect the economy in the short and medium term. For simplicity assume that the economy was initially in equilibrium.
Statement 1: A monopoly firm can make positive economic profits in the short run. Statement 2: A monopoly firm can make positive economic profits in the long run. Statement (1) and statement (2) are both false. Statement (1) and statement (2) are both true. Statement (1) is true; statement (2) is false. Statement (1) is false; statement (2) is true. Afirm finds that the profit-maximizing level of output, Q is equal to 100 units. At this quantity, P - $5,...
QUESTION 1 1.1 Illustrate on the following diagram of the South African foreign exchange market what will happen to the exchange rate between the rand and the US dollar if South Africa implements export promotion measures. Remember to label your diagram. 1.2. Use a diagram to explain how a decrease in the interest rate will affect the quantity of money demanded in the money market. 1.3 Suppose the Minister of Finance has asked you to advise him on the formulation...