The figure to the right illustrates market demand for a monopoly along with its average total cost (ATC) curve.Is the monopoly a natural monopoly?The firmO A. is a natural monopoly because its demand curve is downward sloping.O B. is a natural monopoly because it has the potential to earn economic profits.OC. is not a natural monopoly because its demand curve is not infinitely elastic.O D. is not a natural monopoly because it experiences diseconomies of scale.OEE. is a natural monopoly because it can supply the entire market at lower average total cost than can two or morefirms.Suppose 14 units of output are supplied in the market. How much lower is the average total cost of production for onefirm compared to two firms?One firm can supply 14 units of output for $less per unit in average total cost than two firms. (Enter your response asan integer.)Price and cost (dollars per unit)10.00-9.00-8.00-7.00-6.00-5.00-4.00-3.00-2.00-1.00-0.00-0246ATCDemand8 10 12 14 16 18 20 22 24QuantityQ✔

Monopoly is the kind of market where there is only one seller. The seller is therefore the price…

Is the monopoly a natural monopoly? The firm A. is a natural monopoly because its demand curve is downward sloping. B. is a natural monopoly because it has the potential to earn economic profits. C. is not a natural monopoly because its demand curve is not infinitely elastic. D. is not a natural monopoly because it experiences diseconomies of scale. E. is a natural monopoly because it can supply the entire market at lower average total cost than can two or more firms. Suppose 14 units of output are supplied in the market. How much lower is the average total cost of production for one firm compared to two firms? One firm can supply 14 units of output for $less per unit in average total cost than two firms. (Enter your response as an integer.) Price and cost (dollars per unit) 10.00 9.00- 8.00- 7.00- 6.00- 5.00- 4.00- 3.00- 2.00- 1.00- 0.00- 0 2 4 6 8 ATC Demand 10 12 14 16 18 20 22 24

Is the monopoly a natural monopoly? The firm A. is a natural monopoly because its demand curve is downward sloping. B. is a natural monopoly because it has the potential to earn economic profits. C. is not a natural monopoly because its demand curve is not infinitely elastic. D. is not a natural monopoly because it experiences diseconomies of scale. E. is a natural monopoly because it can supply the entire market at lower average total cost than can two or more firms. Suppose 14 units of output are supplied in the market. How much lower is the average total cost of production for one firm compared to two firms? One firm can supply 14 units of output for $less per unit in average total cost than two firms. (Enter your response as an integer.) Price and cost (dollars per unit) 10.00 9.00- 8.00- 7.00- 6.00- 5.00- 4.00- 3.00- 2.00- 1.00- 0.00- 0 2 4 6 8 ATC Demand 10 12 14 16 18 20 22 24

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter15: Monopoly

Section: Chapter Questions

Problem 7PA

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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.
Suppose the local electrical utility, a legal monopoly based on economies of scale, was split into four films of equal size, with the idea that eliminating the monopoly would promote competitive pricing of electricity. What do you anticipate would happen to prices?
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
Imagine a monopolist could charge a different price to every customer based on how much he or she were willing to pay. How would this affect monopoly profits?
Return to Figure 9.2. Suppose P0 is 10 and P1 is 11. Suppose a new firm with the same LRAC curve as the incumbent tries to bleak into the market by selling 4,000 units of output. Estimate from the graph what the new firms average cost of producing output would be. If the incumbent continues. to produce 6,000 units, how much output would the two films supply to the market? Estimate what would happen to the market price as a result of the supply of both the incumbent firm and the new entrant. Approximately how much profit would each firm earn? Figure 9.2 Economics of Scale and Natural Monoploy
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.
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
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.
Why does a monopoly arise? O because of diseconomies of scale because entry to an industry is blocked because of elastic demand because firms want to maximize profits
One of the requirements for a monopoly is that Select one: a. The product cannot be produced by small firms. b. There is a unique product with no close substitutes. O c. Products are high priced. O d. There are several close substitutes for the product
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.
QUESTION 10 For a monopoly firm: O A. total revenue is a straight, O B. the marginal revenue curve lies O C. the marginal revenue curve lies O D. the marginal revenue curve lies upsloping line because a firm's sales are independent of product price above the demand curve because any below the demand curve because below the demand curve because reduction in price applies to all units any reduction in price applies to any reduction in price applies only to the extra unit sold sold all units sold