The diagram shows cost and revenue curves for a natural monopolyproducing electricity. Price is dollars per kilowatt hour and quantity is kilowatthours per day.Suppose this firm is being regulated using a pricing policy of average-costpricing. In this case, economic losses are equal toO A. $30,000.O B. $0.O C. $11,000.O D. $7,000.O E.$126,000.CoPrice($/kwh)0.15)0.140.130.118:89EMR3.6Quantity (million)35.4ATCMCDQQ4

To determine the economic losses under average-cost pricing, we need to find the difference between…

Answered: The diagram shows cost and revenue…

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter13: Monopoly And Antitrust

Section: Chapter Questions

Problem 6P

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Similar questions

Suppose demand for a monopolys product falls 50 that its profit-maximizing price is below average variable cost. How much output should the film supply? Hint: Draw the graph.
Draw the demand curve, marginal revenue, and marginal cost curves from Figure 9.6, and identify the quantity of output the monopoly wishes to supply and the price it will charge. Suppose demand for the monopolys product increases dramatically. Draw the new demand me. What happens to the marginal revenue as a result of the increase in demand? What happens to the marginal cost curve? Identify the new profit-maximizing quantity and price. Does the answer make sense to you? Figure 9.6 Illustrating Profits at the HealthPill Monolpoly
How does the quantity produced and price charged by a monopolist compare to that of a perfectly competitive film?
The figure to the right shows the average cost of production (AC) for a cable company that is a monopoly as well as the corresponding demand (D) for cable subscriptions in the city to which the company provides service. Is this company a natural monopoly? This firm O A. is a natural monopoly because average cost is decreasing when it crosses demand. B. is not a natural monopoly because its demand is downward sloping. C. is a natural monopoly because total cost does not always increase with output. O D. is a natural monopoly because it has excess capacity. O E. is not a natural monopoly because it must advertise. Price (dollars per subscription) 80- 76- 72- 68- 64- 60- 56- 52- 48- 44- 40- 36- 32- 28- 24- 20- 16- 12- 8- 4- 0- D AC 5 6 8 9 Quantity (cable subscriptions in 1000s) Ⓡ 10
The graph shows the average cost, marginal cost, demand, and marginal revenue curves for a monopoly firm. If the firm produces 45 units of output per day, it Price Average (dollars Marginal cost per unit) 10 cost 8 4 Demand Marginal revenue 10 20 30 40 45 Quantity (units per day) Select one: O a. will be maximizing profit. O b. will be able to increase profit by producing less per day. O c. will charge a price that exceeds its marginal cost. O d. will be able to increase profit by producing more per day.
Assume a monopoly firm has a downward sloping linear demand curve and cannot price discriminate. What happens to the firm's marginal revenue as it sells additional units? Select one: O a. Marginal revenue increases. O b. Marginal revenue is constant. O c. Marginal revenue increases then decreases. d. Marginal revenue decreases then increases. e. Marginal revenue decreases.
Over a recent family dinner, your Aunt Trudy expresses her disdain for price discriminating monopoly businesses, to which you, having taken some economics reply, "A perfect price discriminating monopoly may convert all of the consumer surplus to monopoly profit, but at least it produces O A. more output than a competitive industry would produce. OB. the same output that a competitive industry would produce. C. at the minimum of its average total cost (ATC) curve. D. where its marginal cost (MC) curve is still declining.
ystem (Academic) Mes of Microeconomics || Fall20 Suppose a monopolist's costs and revenues are as follows. ATC = S50, MC = $35; MR = $40; P $55. The firm should of Select one: O a. decrease output and increase price. tion O b. increase output and decrease price. O c not change output or price. O d. shut down. Next page s page 00 HUAWEI Nova 3 Al CAMERA
QUESTION 12 The table below shows a monopolist's demand curve and the cost information for the production of its good. What will their profits equal? Quantity Price per UnitTotal Cost 10 $100 20 $80 $60 $40 $20 O 30 40 50 a. $600 O b. $1,200 O c. $1,600 O d. $1,000 $100 $400 $800 $1,400 $2,400
A monopoly firm's total cost is: TC(Q) =Q' + 15Q + 225. if the industry's demand curve is described by P= 195 - 4Q. What price will this firm charge if it is applying the profit maximizing rule? (Hint: MC = 20 + 15) O a. $ 105.00 O b. $ 75.00 O c.$ 145.00 O d. $ 127.50 O e. $ 123.00
Scenario 15-1 A monopoly firm maximizes its profit by producing Q = 500 units of output. At that level of output, its marginal revenue is $30, its average revenue is $60, and its average total cost is $34. Refer to Scenario 15-1. At Q = 500, the firm's profit is O a. $17,000. O b. $30,000. O c. $15,000. O d. $13,000.
Exercise 5. You are the manager for a monopoly with costs, demand, and marginal revenueas in the graph at the top on Figure 1.a. Does the fact that you operate in a monopoly always guarantee that you can achievehigher profits by increasing the price? Explain.b. Draw the area representing the profits on the top graph on Figure 1.c. Suppose one of your suppliers just announced an increase in prices for a specific partthat your product requires. What should the impact be to each of the curves on thetop graph of Figure 1? Explain carefully.d. Suppose economic conditions change in such a way that the demand curve for yourcompany shifts left.i. Draw a demand curve on the bottom graph on Figure 1 that leads to zero economicprofits.ii. Draw a demand curve on the bottom graph on Figure 1 such that any furtherleftward demand shift will cause you to shutdown.

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