Refer to Figure 13.1. Here AR or Price is represented by the line D. If the government regulates Armstrong Cable so they can earn only zero economic profit, the (fair return) price would be set at: $ 16 15 13 12.50 | ATC : 12 = MC MR D 800 1,000 2,000 2,500 Q Number of cable subscribers Figure 13.1 Dollars

Refer to Figure 13.1. Here AR or Price is represented by the line D. If the government regulates Armstrong Cable so they can earn only zero economic profit, the (fair return) price would be set at: $ 16 15 13 12.50 | ATC : 12 = MC MR D 800 1,000 2,000 2,500 Q Number of cable subscribers Figure 13.1 Dollars

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter11: Monopoly And Antitrust Policy

Section: Chapter Questions

Problem 26RQ: Why does regulatory capture reduce the persuasiveness of the case for regulating industries for the...

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Why does regulatory capture reduce the persuasiveness of the case for regulating industries for the benefit of consumers?
Why are urban areas willing to subsidize urban transit systems? Does the argument for subsidies make sense to you?
Classify the following as a government-enforced barrier to entry, a banker to entry that is not government enforced, or a situation that does not involve a barrier to entry. A City passes a law on how many licenses it will issue for taxicabs A city passes a law that all taxicab drivers must pass a driving safety test and have insurance A well-known trademark Owning a spring that offers very pure water An industry where economies of scale are very large compared to the size of demand in the market
From the graph you drew to answer Exercise 11.6, would you say this transit system is a natural monopoly? Justify. Use the following information to answer the next three questions. In the years before wireless phones, when telephone technology requited having a wile matting to every home, it seemed plausible that telephone service had diminishing average costs and might require regulation like a natural monopoly. For most of the twentieth century, the national U.S. phone company was AT&T, and the company functioned as a regulated monopoly. Think about the deregulation of the U.S. telecommunications industry that has occurred over the last few decades. (This is not a research assignment, but a thought assignment based on what you have learned in this chapter.)
There are 10 households in Lake Wobegon, Minnesota, each with a demand for electricity of Q- 60 - P. Lake Wobegon Electric's (LWE) cost of producing electricty is TC = 600 + 20. a. If the regulators of LWE want to make sure that there is no deadweight loss in this market, what price will they force LWE to charge? What will output be in that case? Calculate consumer surplus and LWE's profit with that price. (Round all responses to two decimal places.) The regulated price would be s2, and the firm would produce 580' units of electricity. Total consumer surplus would be $ 16,820, and the firm would earn a S - 600 profit. b. If reguiators want to ensure that LWE doesn't kose money, what is the lowest price they can impose? Calculate output, consumer surplus, and profit. Is there any deadweight loss? (Round all responses to two decimal places.) The regulated price would be $ and the firm would produce units of alectricity. Total consumer surplus would be $, and the firm would earn a s…
$6.00 $4.50 МС АТC $3.50 $3.00 $2.50 $2.00 $1.00 MR 10 20 30 40 50 60 70 80 90 Quantity If the government regulates the monopolist to produce the allocatively efficient quantity and provides a subsidy sufficient to maintain zero econornic profits for the firm, what price would the government set and what level of output would the firm produce? $1.00 and 50 в $2.00 and 80 $3.00 and 50 D $3.50 and 50 E $4.50 and 30 P Type here to search 21/04 8 Price, Cost
A large share of the world supply of diamondscomes from Russia and South Africa. Suppose thatthe marginal cost of mining diamonds is constant at$1,000 per diamond and the demand for diamonds isdescribed by the following schedule:Price Quantity$8,000 5,000 diamonds7,000 6,0006,000 7,0005,000 8,0004,000 9,0003,000 10,0002,000 11,0001,000 12,000a. If there were many suppliers of diamonds, whatwould be the price and quantity?b. If there were only one supplier of diamonds, whatwould be the price and quantity?c. If Russia and South Africa formed a cartel, whatwould be the price and quantity? If the countriessplit the market evenly, what would be SouthAfrica’s production and profit? What wouldhappen to South Africa’s profit if it increased itsproduction by 1,000 while Russia stuck to thecartel agreement?d. Use your answers to part (c) to explain why cartelagreements are often not successful.
2:03 D 19 ll 37% Marked out of 30 P Flag question Suppose you are a manager of a County government project that is meant to provide rent-regulated housing units in low-income settlements. Using your knowledge of equilibrium, advice the Governor whether this policy will be a а. success. A Monopolist producing and supplying cooking gas to Mombasa city faces the demand b. function. = 8800 – 20P. Its cost function is given by TC = 20Q + 0.05Qʻ. Determine the quantity of cooking gas she will produce and the price she will charge to maximize profits and determine her profit. i. i. Explain how her profits she will affected if regulators forced her to operate like a perfectly competitive firm. ii. Illustrate and compute dead-weight loss and lost consumer surplus associated with her Monopoly operations. B I II II !!!
Output D 1 2 3 4 5 Maple Choice O Refer to the demand and cost data for a pure monopolist given in the table if the monopolist perfectly price-descriminated and sold each unt of the product at the maximum price the buyer of that unit would be willing t pay, and if the monopolist maximized profits, then the total profit receved would be O 5820 $550 $1,500 Price $420 $900 380 340 300 260 220 Total Cost $250 260 290 350 500 600
Gouge-em Cable Company is the only cable television servicecompany licensed to operate in Backwater County. Most of itscosts are access fees and maintenance expenses. These fixed costs total $640,000 monthly. The marginal cost of addinganother subscriber to its system is constant at $2 per month.Gouge-em’s demand curve can be determined from the datain the accompanying table. a. What price will Gouge-em charge for its cable services?What are its profits at this price?b. Now suppose the Backwater County Public UtilityCommission has the data and believes that cablesubscription rates in the county are too expensive and thatGouge-em’s profits are unfairly high. What regulated pricewill it set so that Gouge-em makes only a normal rate ofreturn on its investment?
e ap sep 0 ja ajaloo Purwas ap o Consider a town in which only two residents, Clancy and Eileen, own wells that produce water safe for drinking. Clancy and Eileen can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. Tab Caps Lock Price (Dollars per gallon) 6.00 5.50 5.00 4.50 Esc is 81°F Sunny 4.00 3.50 3.00 2.50 2.00 1.50 1.00 ! 0.50 0 7 Q A Quantity Demanded (Gallons of water) 0 45 17 F2 8- @ Suppose Clancy and Eileen form a cartel and behave as a monopolist. The profit-maximizing price is $ gallons. As part of their cartel agreement, Clancy and Eileen agree to split production equally. Therefore, Clancy's profit is - C VE 2 W 90 135 S. 180 225 270 315 360 405 450 495 540 F3 0+ #M 3 Total Revenue (Dollars) 0 $247.50 $450.00 $607.50 $720.00 $787.50 $810.00 $787.50 $720.00 $607.50 E F4 BO $450.00 $247.50 0 D $ 4 F5 R F % 5 F6 D T F7 ^ 6 G 4- Y FB J+ & 7 per gallon, and the total…
=b10| || || phphattempt 631066&cmid=55726&page-31 $25 4 aaa $5 S Select one Ob $50 O $500 04 $1,000 888 The diagram above shows the demand and cost curves for a market that could either be a monopoly or perfectly competitive in Long Fun Equilibrium the market a onopoly Deadweight Loss DWL) would be R F % 5 V T 200 300 400 500 600 Output 10) G M 6 B MacBook Air PR LAATC LMC Y Demand P H &7 U N 8 61 M W DI K GTE " O 1 Next 0 V L