Suppose society decides a monopoly must produce at an allocatively efficient level. Therefore it regulates the market so that the market price is equal to marginal cost (P = MC), we call this the:
Group of answer choices
Fair-Return Price
Socially Optimal Price
Social Construct Price
Monopoly Market Price
Fair return price
Explanation: In fair return price, the price equals the marginal cost.
Suppose society decides a monopoly must produce at an allocatively efficient level. Therefore it regulates the market so...
1) The "Profit-Max/Loss-Min/Shutdown Rule" applies to: Group of answer choices Pure Monopoly only Perfect Competition only Most market structures All market structures 3) A firm in a monopoly market structure always operates at an economic profit. Group of answer choices True False 4) Comparing monopoly and competitive market structures, "Deadweight Loss" refers to: Group of answer choices Underground markets developing to supply the monopoly good. Shortages caused by high monopoly pricing. The production gap resulting from under-allocation of resources. Surpluses...
Suppose a society does not wish to be forced to subsidize a monopoly producing at an allocatively efficient level. However, they are also unwilling to allow the monopoly to set its own production level. This "Fair-Return Price" level occurs when: Group of answer choices P = MC MR = MC P = MR P = ATC
4. Efficiency in the presence of externalities Parks confer many external benefits on society: open space, trees that reduce pollution, and so on. Therefore, the market equilibrium quantity of parks is not equal to the socially optimal quantity. The following graph shows the demand for parks (their marginal private benefits), the supply of parks (the marginal private costs of producing them), and the marginal social benefits of parks, including both the marginal private benefits and external benefits.Use the black point (plus...
Suppose that, assuming a firm decides to produce a product, it must build a production facility. The fixed cost of this facility is F = 90. Also, the firm has constant marginal cost, MC = 5. Demand for the product that the firm produces is given by P = 40-5Q. a) On a single graph, carefully draw the MC curve, the demand curve, and the ATC curve. Your graph should go up to 8 units of output. Please label your...
= 18 - 1. Suppose we realize that the market described in question 1 (Market demand is still Q P) has a negative externality. The cost function Cp(Q) = { Q2 is private cost. We now know the cost of the externality is Ce(Q) = Q2. a. What is the marginal cost of the externality, MCE? b. What is the marginal cost to society of production MCs? c. What is the Socially Optimal quantity and price? d. How does the...
6. (16 points) Suppose we realize that the market described in question 1 (Market demand is still Q = 18 – P) has a negative externality. The cost function C(Q) = Q2 is private cost. We now know the cost of the externality is Ca(Q)=Q?. a. What is the marginal cost of the externality, MCE? b. What is the marginal cost to society of production MCS? c. What is the Socially Optimal quantity and price? d. How does the socially...
me bn dne one P 40- Q And suppose that Mr India is monopoly supplier of lamb biryani in the township with a constant marginal cost: MC 10 a) On a clearly labeled diagram, sketch the demand, marginal revenue, and marginal cost curves and calculate and show the monopolist's profit-maximising quantity (QM) and the price that will be charged in the market (PM). (4 marks) b) Calculate the consumer surplus and producer surplus at the monopoly equilibrium and the deadweight...
4. The effect of negative externalities on the optimal quantity of consumption Consider the market for paper. Suppose that a paper factory dumps toxic waste into a nearby river, creating a negative externality for those living downstream from the factory. Producing an additional ton of paper imposes a constant marginal external cost of $100 per ton. The following graph shows the demand curve and the private marginal cost (MC) curve for paper. (Note: The demand for the plant's paper is...
Graph Worksheet 01 02 03 1. What is the price and quantity at the optimum level of production? Is this an economic profit, loss, or break-even? Should the firm produce? 2. If the industry model is monopolistic competition, what will happen to the industry? What will happen to the demand and marginal revenue curves for the individual firm? In the long run, where will the demand curve be? Will the firm achieve productive and/or allocative efficiency? 3. If the industry...
Suppose Madison Gas and Electric (MGE) is a natural
monopoly for electricity. That is the case where no firm can
produce the total quantity in a market more cheaply than multiple
firms because there is a large fixed cost or economies of scale in
this industry. The demand curve, average total cost curve, marginal
cost curve, and margin revenue for this firm are shown in the
picture below.
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