Microeconomics
11th Edition
ISBN: 9781260507140
Author: David C. Colander
Publisher: McGraw Hill Education
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Chapter 15, Problem 2QAP
(a)
To determine
Explanation of the opinion about the statement.
(b)
To determine
Problem of the argument.
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The following graph shows the demand (D) for cable services in the imaginary town of Utilityburg. The graph also shows the marginal revenue (MR)
curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local cable company, a natural monopolist.
On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist.
(?
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Monopoly Outcome
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ATC
30
MC
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10
MR
D
2
6
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QUANTITY (Number of subscriptions)
Which of the following statements are true about this natural monopoly? Check all that apply.
O In order for a monopoly to exist in this case, the government must have intervened and created it.
O The cable company is experiencing diseconomies of scale.
O The cable company is experiencing economies of scale.
O It is more efficient on the cost side for one producer to exist in this market rather than a large number of producers.
True or False: Without government…
What are the four most important ways a firm becomes a monopoly? Will a monopoly that maximizes profit also be maximizing revenue? Will it be maximizing output? Explain.
Assume the graph below represents the market for a monopolist. What quantity will the monopolist produce, and what price will she charge? What will her total revenue, costs, and profit be at this production level? What will the deadweight loss for society be at this level of production? (Assume the MC curve is a straight line between the relevant points for this calculation.)
There are claims saying that free flow of trade prevents monopoly. However, free flow of trade may cause monopoly through predatory pricing. For instance, a foreign industry may dump its goods in a country with free flow of goods strategy. Thus, it forces other rivals out of the market, and will get a monopoly position.
Please provide a counter-argument for the above claim
Chapter 15 Solutions
Microeconomics
Ch. 15.1 - Prob. 1QCh. 15.1 - Prob. 2QCh. 15.1 - Prob. 3QCh. 15.1 - Prob. 4QCh. 15.1 - Prob. 5QCh. 15.1 - Prob. 6QCh. 15.1 - Prob. 7QCh. 15.1 - Prob. 8QCh. 15.1 - Prob. 9QCh. 15.1 - Prob. 10Q
Ch. 15 - Prob. 1QECh. 15 - Prob. 2QECh. 15 - Prob. 3QECh. 15 - Prob. 4QECh. 15 - Prob. 5QECh. 15 - Prob. 6QECh. 15 - Prob. 7QECh. 15 - Prob. 8QECh. 15 - Prob. 9QECh. 15 - Prob. 10QECh. 15 - Prob. 11QECh. 15 - Prob. 12QECh. 15 - Prob. 13QECh. 15 - Prob. 14QECh. 15 - Prob. 15QECh. 15 - Prob. 16QECh. 15 - Prob. 17QECh. 15 - Prob. 18QECh. 15 - Prob. 1QAPCh. 15 - Prob. 2QAPCh. 15 - Prob. 3QAPCh. 15 - Prob. 4QAPCh. 15 - Prob. 5QAPCh. 15 - Prob. 1IPCh. 15 - Prob. 2IPCh. 15 - Prob. 3IPCh. 15 - Prob. 4IPCh. 15 - Prob. 5IPCh. 15 - Prob. 6IPCh. 15 - Prob. 7IP
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- To answer this question, you will want to work out the answer using a graph on a piece of scratch paper (not turned in). You are going to compare the outcomes in the case where there is perfect competition to the monopoly case. So, as an intermediate step, you will need to compute the equilibrium outcomes under competition and monopoly. Suppose that you have the following information about the demand for oil. Price ($/barrel) 80 70 60 50 40 30 20 10 Suppose that the marginal cost to produce a barrel of oil is $20. What is the deadweight loss if the oil market is a monopoly? Quantity demanded(# barrels) 5 6 7 8 9 10 11 12arrow_forwardThe following graph shows the demand (D) for gas services in the imaginary town of Utilityburg. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local gas company, natural monopolist. On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist. (? 20 18 Monopoly Outcome 16 14 12 10 ATC MC MR 1 3 5 6 7 8 9 10 QUANTITY (Hundreds of cubic feet) PRICE (Dollars per hundred cubic feet)arrow_forwardConsider the fish market where demand is given by the following equation: P=52-Q where P is the price in dollars and Q is the quantity in kilos. All firms are identical and the marginal cost is 12. 15-If the market were competitive, what would the price be and how many units would be produced? You must provide your calculations. 16-If the market was made up of only one firm (a monopoly), what would the price be and how many units would be produced? You must provide your calculations. 17-If the market was made up of two firms (a duopoly) and they chose their level of production simultaneously: what would the price be and how many units would be produced by each firm? You must provide your calculations. 18-If the market was made up of two firms (a duopoly) and firm 2 was dominant (i.e. it chose its level of production first): what would the price be and how many units would be produced by each firm? You must provide your calculations. 19-Compare the quantities produced by each of the…arrow_forward
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