Happyland is one of five amusement parks on Sunshine Island. The following graph shows Happyland's kinked demand curve (D₁ - D₂) and the resulting marginal revenue curve (MR₁-MR₂). The graph also shows two possible marginal cost curves (MC₁ and MC₂). PRICE(Dollars per ticket) 60 55 50+ 45 40 35 30 15 10 5 0 + MR. + + 0 1 2 MR, 3 4 5 6 7 8 9 QUANTITY (Millions of tickets per year) 10 MC MC₂ D 4 11 12 Assume Happyland's marginal cost is represented by MC₁. Happyland will set a price of its price, According to the kinked demand curve model, if one firm its price, other firms will not follow suit, but if one firm other firms will do likewise to retain their market share. Therefore, if one of Happyland's competitors increases its price to above the price you just found for Happyland, Happyland will The basic principle behind the kinked demand curve model explains why D₁ portion of t D₂ portion. per ticket. If Happyland's marginal cost decreased from MC₁ to MC₂ on the graph, Happyland would kinked demand curve is relatively elastic than the

Happyland is one of five amusement parks on Sunshine Island. The following graph shows Happyland's kinked demand curve (D₁ - D₂) and the resulting marginal revenue curve (MR₁-MR₂). The graph also shows two possible marginal cost curves (MC₁ and MC₂). PRICE(Dollars per ticket) 60 55 50+ 45 40 35 30 15 10 5 0 + MR. + + 0 1 2 MR, 3 4 5 6 7 8 9 QUANTITY (Millions of tickets per year) 10 MC MC₂ D 4 11 12 Assume Happyland's marginal cost is represented by MC₁. Happyland will set a price of its price, According to the kinked demand curve model, if one firm its price, other firms will not follow suit, but if one firm other firms will do likewise to retain their market share. Therefore, if one of Happyland's competitors increases its price to above the price you just found for Happyland, Happyland will The basic principle behind the kinked demand curve model explains why D₁ portion of t D₂ portion. per ticket. If Happyland's marginal cost decreased from MC₁ to MC₂ on the graph, Happyland would kinked demand curve is relatively elastic than the

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter14: Monopoly

Section: Chapter Questions

Problem 6PA

See similar textbooks

Similar questions

You own Athleticon, which manufactures athletic wear. Your new contract with Atlanta United, a professional soccer team, allows Athleticon to be the sole suppler of athletic wear with the “Atlanta United” logo. No one lese can manufacture athletic wear with the “Atlanta United” logo. What do you think will be Athleticon’s level of profitability on the sale of “Atlanta United” athletic wear? Explain why. Your contract with Atlanta United only lasts 3 years. It was not renewed. Other firms can now manufacture athletic wear with the “Atlanta United” logo It is now 5 years after your contract with Atlanta United was terminated. Any manufacturer that wants to can manufacture and sell athletic wear with the “Atlanta United” logo. What do you think will be the level of profitability and rate of return on manufacturing athletic wear with the “Atlanta United” logo? Explain why.
6. Understanding the kinked demand curve model Happyland is one of five amusement parks on Sunshine Island. The following graph shows Happyland's kinked demand curve (D₁ - D₂) and the resulting marginal revenue curve (MR₁-MR₂). The graph also shows two possible marginal cost curves (MC₁ and MC₂). PRICE(Dollars per ticket) 8 33 30 5 27 + 24 21 18 15 12 9 6 3 0 MR. 03 D. MR 6 9 12 15 18 21 24 27 QUANTITY (Millions of tickets per year) 30 MC MC₂ D 33 36 ? Assume Happyland's marginal cost is represented by MC₂. Happyland will set a price of per ticket. According to the kinked demand curve model, if one firm its price, other firms will do likewise to retain their market share, but if one firm its price, other firms will not follow suit. Therefore, if Happyland increases its price to above the price you just found for Happyland, its competitors will The basic principle behind the kinked demand curve model explains why the D₁ portion of the kinked demand curve is relatively D₂ portion. If…
2. Two cereal firms that set prices and sell differentiated products propose to merge. Firm 1sells CrunchyCrunch for a price of $10 with a marginal cost of $6. Firm 2 sells FibryFibre for aprice of $12 and a marginal cost of $6.(a) When the price of CC rises, 20% of its lost demand goes to FF. What is the marginal costreduction for CC that is required to offset the upwards pricing pressure on the CC price?(b) You are employed as a consultant by the merging firms. You know that the DOJ knowsthat the marginal cost of FF will fall by 50 cents as a result of the merger, but that the agency isunsure of the diversion between FF and CC. How small will you need to claim that the diversionis in order for there to be no net upwards pricing pressure on the CC price?
17 of 16 BNW is one of many producers of luxury wheelchairs, which are differentiated to appeal to different market niches. BNW's Price per chair relevant demand and cost curves are depicted in the graph. $2,000 Average total Use this graph to answer the questions. Assume that there are 1,800 Marginal cost no significant barriers to entry. cost 1,600 Determine BNW's profit-maximizing price and quantity. 1,400 1,200 1,000 price per chair: $ 800 600 400 quantity of chairs: chairs 200 Demand Marginal revenue 100 200 300 400 500 600 700 800 900 Calculate BNW's profit. Chairs per week BNW's profit: $
Price (dollars per jacket) 888888 180 160 140 120 100 60 40 20 0 80 160 MC profit; $13,000 profit; $7,200 Oloss; $8,000 In the figure above, Gap's economic loss: $13,000 ATC The figure shows the demand curve for Gap jackets (D), and Gap's marginal revenue curve (MR), marginal cost curve (MC), and average total cost curve (ATC). MR 240 320 400 Quantity (jackets per day)
E E on The diagram illustrates the demand curve, isoprofit curves and the marginal cost curve of MQ2020, a luxury car manufactured by MQ Motors. Assume that MQ Motors currently chooses to operate at Point E. Which statement correctly describes the market of MQ2020? 10,000 Price, marginal cost (5) Pt-$5,440 Po B 0 190 20 Q=32 D Qo Quantity of cars, Q Marginal cost Isoprofit curve $150,000 Isoprofit curve 563,360 Demand curve 120 Select one: O a. Total surplus is not being maximised. Ob. Deadweight loss is the loss incurred by MQ Motors for not selling more cars. O All possible gains from trade are being achieved as MQ Motors operates at its profit-maximising output and price. Od. The amount of consumer surplus is the area ADP. O e. Pareto efficient allocation is currently being achieved.
II. Problem 1. Tennis Products, Inc., produces three models of high-quality tennis rackets. The following table contains recent information on the sales, costs, and profitability of the three models: Average Quantity Sold (Units/Month) 15,000 5,000 10,000 Variable, Cost per Contribution Current Price Total Margin Per Unit Contribution Model Revenue Unit Margin* $225,000 85,000 250,000 $560,000 A $30 $450,000 175,000 450,000 $1,075,000 $15 $15 B 35 18 17 C 45 20 25 Total * Contribution to fixed costs and profits. The company is considering lowering the price of Model A to $27 in an effort to inçrease the number of units sold. Based on the results of price changes that have been instituted in the past, Tennis Products' chief economist estimates the arc price elasticity of demand to be -2.5. Furthermore, she estimates the arc cross elasticity of demand between Model A and Model B to be approximately 0.5 and between Model A and Model C to be approximately 0.2. Variable costs per unit are…
Refer to Figure 1. If the market price is $2, what the firm will do? Enable Editing 4) Use the figure below to answer the following questions. Price and cost (dollars per unit) 80 MC 60 40 ATC 20 MR 20 40 60 80 100 Quantity (units per week) Figure 2 a) Refer to Figure 2 If this firm is in monopolistic competition, what is its output? b) Refer to Figure 2 If this firm is in monopolistic competition, what is the price it will charge? c) Refer to Figure 2. What is the firm profit situation? What time frame equilibrium is the firm? d) Refer to Figure 2. If this firm in monopolistic competition is in short-run equilibrium, and the firm making profit what will happen in the long run to the firm profit? explain
COURSE: MICROECONOMICS 2 - MONOPOLY IN DURABLE GOODSA monopolistic firm has estimated its inverse demand function as P = 200 − 0.5 Q + 40*(1/UL) with a increasing marginal cost (MC) estimated to be 10 Q. (a) Estimate effect on firm's extraordinary profit if it changes useful life (UL) of its product from 8 years to 5 years. b) What will happen to selling price?
3. What is the firm's economic profit? 4. Bonus: If fixed costs increased from 20 to 100 how would your answers change for parts 1, 2 and 3 above? 5. In the lecture videos we discussed the broadband internet monopoly that is common in many parts of the US, including in Laramie. BONUS: Name two consequences of this monopoly
Help me
4. Draw a demand, marginal revenue and marginal cost curve for a monopoly firm. Be sure to label axes and curves. a. Identify efficient and equilibrium quantity exchanged. b. Identify monopoly price. c. Explain why I am not asking for a supply curve. 5. Explain what is the relationship between marginal cost and average total costs for a firm or industry exhibiting each of the following: a. Economies of scale. b. Constant returns to scale. c. Diseconomies of scale. 6. Assume that the economy is facing the zero lower bound. a. Explain how the Federal Reserve might engage in expansionary monetary policy and what that will do when the economy is facing the zero lower bound. b. Explain how expansionary fiscal policy might influence the economy when facing the zero lower bound. Please answer all questions