Economics (Irwin Economics)
21st Edition
ISBN: 9781259723223
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 15, Problem 9DQ
To determine
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1.Briefly state the basic characteristics of pure competition, pure monopoly, monopolistic competition, and oligopoly. Under which of these market classifications does each of the following most accurately fit? (a) a supermarket in your hometown; (b) the steel industry; (c) a Kansas wheat farm; (d) the commercial bank in which you or your family has an account; (e) the automobile industry. In each case, justify your classification. LO1
Question 2 [JP.14.3.19]
Consider a duopoly where the market demand is described by the equation: P = 150- Q. The marginal
cost for each firm is $60.
lo.] If the firms compete simultaneously with output, what is each firm's profit-maximizing output, the market
quantity, and the price each firm charges?
(b.) What is the economic profit eamed by each firm (from question [a]}
[c.) If Firm 1 is a leader in output, what is each firm's profit-maximizing output, the market quantity, and the
price each firm charges?
[d.] What is the economic profit earned by each firm (from question [c])?
Ignore AFC and AVC
2. Suppose a pure monopolist faces the following demand schedule and the same cost data as the competitive producer discussed in
problem 4 at the end of Chapter 10. Calculate the missing TR and MR amounts, and determine the profit-maximizing price and
profit-maximizing output for this monopolist. What is the monopolist's profit? Verify your answer graphically and by comparing total
revenue and total cost. LO11.4
Average
Total
Average
Variable
Average
Marginal
Product
Fixed Cost
Cost
Total Cost
Cost
0
$45
1
$60.00
$45.00
$105.00
40
2
30.00
42.50
72.50
35
3
20.00
40.00
60.00
30
4
15.00
37.50
52.50
35
5
12.00
37.00
49.00
40
6
10.00
37.50
47.50
45
7
8.57
38.57
47.14
55
8
7.50
40.63
48.13
65
9
6.67
43.33
50.00
75
10
6.00
46.50
52.50
Price Quantity Demanded Total Revenue Marginal Revenue
$115
83
63
55
48
42
29
2 % 522332
100
0
1
2
3
4
5
6
7
37
8
9
10
$
Chapter 15 Solutions
Economics (Irwin Economics)
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- penumy.edu LA0 u ten Que Complio St QUESTION 2Y MC 14 13 ATC MR 登 S8R Shce tm the above e is perng monopeicaly competve indutry in the long n we an expect o see Othe lypical fm's econom prolts expand as preduction hecomes more efficient Ohe lypal em praducng theimu po on ATC curve O mar mseterng the ndty un ecunomie profs ah empand share of the tet QUESTION 23 Suppese an indstry has utal sales f 25 millon per y The teo larpest fems have sales of $6 millen each the id largest fem has sales of 2 miion, and the fourth largest f has sales of S1 millon The rm conceation ratio for thin nduty O 30 percent O 1 percent O25 percent O 60 percent QUESTION 24 Suppose there are four frm in an industry The market shares of the four fems are 5 percent, 20 percent 35 percert, and 40 percent The Hurfindahi Hischan index tor that industry O 100 O6 650 O 1.250 O 3250 Chck Sane and Sulmit to ae and aulimit. Click Sate All Anaue to se all aencers Sa Aarrow_forwardThe figure on the right shows the demand schedule for a product produced by a single-price monopolist. Price ($) 9 8 0000 7 6 5 4 3 C. 5th unit Quantity demanded What is the lowest level of output at which marginal revenue becomes negative? OA. 6th unit OB. 9th unit D. 7th unit OE. 8th unit 5 6 7 8 9 10 11 Price ($) 141 222 =26=LO 13- 12- 11- 10- 9- 8- 4- 2- 1- 45 6 7 8 9 10 11 12 13 14 15 16 Quantity Earrow_forwardWhat is a feature common to both Monopolistic-Competition and Oligopoly type of markets? O productive efficiency will occur in both the short run and long run, a desirable economic property of markets. many smaller sized firms can produce the good or service at lower cost per unit than larger sized firms, thus large firms fail in the long run. the demand curve for each firm is not going to be purely elastic, because products are at least slightly different than potential rival firms' product and/or there may be some consumer brand loyalty. Firms in both types of markets eventually will be broken up by government anti-trust laws and regulations. MacBook Pro く※ G Search or type URL 6 7 8. 3 4. W Earrow_forward
- The following diagram depicts the operating conditions for a profit-maximising monopolist. Calculate the deadweight loss created by this monopoly selling at the profit maximising point. Price ($) MC 10 Demand MR 5 7.5 10 Quantity (a) $4.25 (b) $6.25 (c) $8.25 (d) None of the above. 20 15 LO 20 15arrow_forwardQuestion 17 3아- MC ATC 26 27 26 25 24 AVC 20 MR 100 190 260 300 400 What is the optimal output and price for the prafit maximizing, nondiscriminating monopolist in the exhibit above? O 190 and $30 O 190 and $26 O 190 and $25 O 260 and $28 O 300 and $27 D Question 18 $/9 30- MC ATC 28 27 AVC 26 25 24 D. 2아 MR 100 190 260 300 400 Total cost for this nondiscriminating monopolist at its profit-maximizing output level in the exhibit above is O $7280 O $4750 $5700 None of the choices are correct O $4940 D Question 19 Why is collusian to raise prices highly unlikely among firms in perfectly competitive industries? O All the firms in competitive industries love their consumers too much to ever collude against them O There is only one firm in perfectly competitive industries, so whom would they collude with? • There are too many firms in perfectly competitive industries. O The products are too differentiated for collusion in perfectly competitive industries 3 This is a trick question because…arrow_forwardSuppose there are two firms in an industry and the inverse demand function for the industry is: P = 45 - 20 Assume that the MC functions for the two firms are: MC1 = 15 MC2 = 12 What is the price under Courbet model? O 15 O 24 O 30 O 36 O 21arrow_forward
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