Suppose market A is currently purely competitive, with consumer surplus equal to $250, producer surplus equal to $250, and the market price equal to $5. Suddenly the firms in this market merge together, effectively becoming a monopoly. As a result, consumer surplus decreases to $100, producer surplus increases to $300, and the market price increases to $8. [27] When market A is purely competitive, market welfare equals $250. A. B. True False [28] The deadweight loss in welfare associated with monopoly in this case equals: $0 A.
Q: Assume the force of interest between time 0 and time 5 is d(s) = 0.07 +0.01t. a) What is the annual…
A: Rates of interest hold significance in economics since they affect lending, borrowing, investments,…
Q: A low cost flat consists of: ▪ 12 nos fluorescent lamps with 40w ▪ 4 nos ceiling fans with 60w ▪ 10…
A: (a) Total Connected Load:Total connected load is the sum of the individual loads of all the devices…
Q: This question asks how the money market graph is affected by a specific event. Note that the money…
A: When regulation makes it more difficult for consumers to withdraw money from existing savings…
Q: Suppose that a worker A may either have a low productivity of 1 or a high productivity of $2>01.…
A: Labour economics is the study of how individuals, businesses, and government officials influence…
Q: Month Price per 2L bottle $ Quantity sold Month Price per 2L bottle $ Quantity sold April 300 10,000…
A: A key idea in economics is the price elasticity of demand, which describes how much customers'…
Q: When Lytle Sue works in the labor market, the total effect on market hours of work due to a decrease…
A: The income effect refers to the change in quantity demanded of a good or service due to a change in…
Q: Now suppose that the insurance company expects that both healthy and unhealthy individuals buy…
A: Since it is mentioned to answer only parts d, e, and f of the solution, Only those parts are…
Q: Consider the following cumulative distribution function for the discrete random variable X. X P(X…
A: The cumulative distribution function represents the probability of less than or equal to the…
Q: Suppose that you are the owner of a bakery. The customers who buy the cakes you bake have different…
A: - Profit maximization refers to the goal of businesses and organizations to generate the highest…
Q: A monopoly book publisher with a constant marginal cost (and average cost) of MC = 11 sells a novel…
A: Monopoly is a type of Market where there is only one single seller,who sells a good that has no…
Q: The Rawls's maximin principle has had _____ among economists because it ________trade-offs. O a.…
A: The Rawls maximin principle, a tenet of political philosophy, asserts that social structures ought…
Q: 1 Assume a firm faces these costs: total cost of capital = $4,000; price paid for labor = $20 per…
A: Note: Since you have posted multiple questions, we will provide the solution only to the first…
Q: Which of the following is an efficient production plan?
A: Production possibility frontier (PPF) depicts the combination of two goods that a nation can produce…
Q: Suppose that the IS curve and monetary policy curve are given, respectively, by Y=200-2r and 1 r=-n…
A: Y = 200 - 2r ----------> IS curve equationr = (1/4) * π ------------> -text"…
Q: Which of the following does NOT increase the supply of personal computers? An increase in the number…
A: The supply of a commodity or service denotes the amount that manufacturers are prepared and capable…
Q: Question 33 - Question 34: Suppose the balance of payments accounts for Home can be summarized by…
A: Balance Of Payment (BOP) is a statement that records all the monetary transactions made between…
Q: The total cost equation for a firm producing two products is TC(Q1, Q2) = 25 + Q12 + 4Q22 + 5Q1Q2…
A: Disclaimer- “Since you have asked multiple question, we will solve the first three question for you…
Q: 100 90 80 70 PRICE 40 30 20 10 Figure 7-7 Supply Refer to Figure 7-7. If the government imposes a…
A: Total surplus is the sum of consumer surplus and producer surplus in a market. It represents the net…
Q: Suppose that the economy is populated by two types of firms, firms with sticky prices and firms with…
A: As per the given informationFirms set their prices as per sticky price and flexible price =0.75---…
Q: Q2 Briefly describe the difference in the bond market in general and the stock market in the context…
A: “Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: IC E 4 YA X Jimmy can consume goods X and Y. The graph above represents one of his indifference…
A: The utility function refers to all those commodity bundles that derive the same amount of utility…
Q: 3 Consider the following probability distribution. xi 0 1 2 3 O 2.5 0.9 O 1.9 P(X = xi) O 1.5 0.1…
A: The expected value is computed by summing up the product of x and the probability associated with…
Q: As manager of the St. Cloud Theatre Company, you have decided that concession sales will support…
A: Let the amount sold for break even be 'x ' Total Cost = Fixed Cost + Variable Cost Variable Cost =…
Q: Suppose that the IS curve and monetary policy curve are given, respectively, by Y=200-2r and 1 =-A…
A: The equation of IS curve: The IS curve is the graphical representation between aggregate output (Y)…
Q: Write a short note on the following models of public policy. A)Rational Model B) Incremental Model…
A: As per the guidelines we are allowed to answer the first three subparts only. Please post the…
Q: If Country A and Country B have the same population size, then the standard of living in these two…
A: “Since you have posted multiple questions, we will provide the solution only to the first question…
Q: A buyer values a house at $525,000 and a seller values the same house at $485,000. If sales tax is…
A: It can be defined as the quantitive value of money which an individual or any entity is willing to…
Q: Using the following graphs, match the market situation with the correct graph. Price a-a XE₂ Q₁ Q₂…
A: Demand curve depicts the inverse relationship between price and quantity demanded given all other…
Q: 2. Subgame Perfect Equilibrium (a) Find Subgame Perfect Equilibrium P1 (2,4) L X C P2 Y Ꭱ U P2 D
A: Hi there , as per our guidelines we are allowed to solve 1 question at a time . Kindly repost the…
Q: The rate of return for the following cash flow is closest to: If you decided to use Excel to solve…
A: Cash flow refers to the movement of money into and out of a business over a specific period. It's…
Q: Answer the given question with a proper explanation and step-by-step solution. Considering the…
A: Collusion is an agreement that takes place between competitors who are not competitive and have…
Q: The following graph shows the same PPF for Denali as before, as well as its initial consumption at…
A: Opportunity cost is the cost of producing one good in terms of other. Opportunity cost shows the…
Q: he adjacent table presents annuity factors for various discount rates and payment periods up to 10…
A: PV = Where:PV = Present ValuePMT = Periodic payment (cash flow) amount = $80000r = Discount rate…
Q: 2. Compensating Variation and Equivalent Variation (CV-EV): A consumer has u=: (a) Derive the…
A: The consumer's demands for good 1 and 2 can be derived using the MRS and the budget line. The MRS is…
Q: The table below reports the price of a Big Mac in various countries, and the exchange rate relative…
A: The value of one currency in another currency's terms is known as the nominal exchange rate. It also…
Q: Use the following payoff matrix for a simultaneous-move one-shot game to answer the accompanying…
A: The optimal strategy in game theory is found by the best response method where no player has an…
Q: Distinguish between accounting profit and economic profit. Provide examples to support your answer.?
A: Accounting and economic profit are two fundamental concepts in the economics of business and…
Q: Mike breaks his hand playing in his weekly basketball league and needs surgery. The hand surgery…
A: Insurance is a contractual plan between an individual or entity (the policyholder) and an insurance…
Q: When the price rises from $5 to $5.75, then the quantity demanded falls from 1000 to 800. What is…
A: It can be defined as a particular amount of demand for any product in the market that is desired by…
Q: Question 1. Suppose a monopolist's production function is given by q = MIN(5L,K). The price of Labor…
A: A production function represents the relationship between inputs (such as labor and capital) and the…
Q: When a country has a comparative advantage in the production of a good, it means that it can produce…
A: A country is said to have a comparative advantage in the production of a good if the opportunity…
Q: Refer to the diagram to the right which shows the demand and cost curves facing a monopolist. If the…
A: Monopoly is a form of market structure in which a single firm sells a commodity for which there are…
Q: Determine which of the two investment projects of Problem 5 the manager should choose if the…
A: Investment involves allocating resources, typically capital, with the expectation of generating…
Q: Two friends, Minrui and Jing, share a flat and both consume internet (i) and all other goods (g).…
A: The utility function denotes all commodity bundles that provide the same amount of utility when…
Q: Joe has the following utility function:U(x; y) = 4x+1y. Let / denote Joe's income, Px the price of…
A: The utility function refers to all those commodity bundles that derive the same amount of utility…
Q: Go to the website for the Kuwait Central Statistical Bureau for data on current and constant Kuwait…
A: The Middle Eastern economy is noteworthy for its mix of oil-reliant and growing non-oil businesses.…
Q: Suppose Eric has the utility over two goods X and Y as U(X, Y) = min{2X, 3Y) and the prices and…
A: Eric utility function: .Price of good x (px) is 2 and the price of good y (py) is 2. Eric's income…
Q: imagine you are the manager of a monopoly that faces a demand curve described by P= 200-3Q. your…
A: The difference between all the expenditures of the firm (total cost) and the total revenue is the…
Q: The State of Chiapas, Mexico, decided to fund a program for improving reading skills in elementary…
A: Equivalent Annual Cost (EAC) is a financial metric used to compare and evaluate different investment…
Q: The estimated short-run cost function of a Japanese beer manufacturer is 1.8 C(q) = 0.6q + 900 q
A: The functional relationship between cost and output is referred to as the "cost function." It…
Trending now
This is a popular solution!
Step by step
Solved in 4 steps with 7 images
- The figure below illustrates the market for steel. If the steel market is competitive, firms can produce steel at a constant marginal cost of $100 per ton. Therefore, the price of steel is $100 per ton, and 100 tons are produced. Assume that if all the steel companies consolidate into a monopoly, the monopoly marginal cost will fall to $70 per ton. Use the straight line tool to draw the monopoly marginal revenue and marginal cost lines (extend the marginal cost line to 300 tons). Then use the plot point tool to plot the monopoly profit maximizing price and output on the demand curve. Part 2. If the market is competitive, total surplus is $ _________ Part 3. If the market is controlled by a monopoly, total surplus is $________Consider 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…Consider the welfare effects when the industry operates under a competitive market versus a monopoly. On the monopoly graph, use the black points (plus symbol) to shade the area that represents the loss of welfare from a monopoly, or deadweight loss. That is, show the area that was formerly producer surplus or consumer surplus and now does not accrue to anybody. Deadweight loss occurs when a monopoly controls a market because the resulting equilibrium is different from the competitive outcome, which is efficient. In the following table, enter the price and quantity that would arise in a competitive market; then enter the profit-maximizing price and quantity that would be chosen if a monopolist controlled this market. Market Structure Price Quantity (Dollars) (Hot dogs) Competitive Monopoly Given the summary table of the two different market structures, you can infer that, in general, the price is higher under a (competitive market or…
- The figure shows the market demand curve for penicillin, an antibiotic medicine. Initially, the market was supplied by perfectly competitive firms Later, the government granted the exclusive right to produce and sell penicillin to one firm. The figure also shows the marginal revenue curve (MR) of the firm once it begins to operate as a monopoly. The marginal cost is constant at $3, irrespective of the market structure What is the surplus enjoyed by the firm when it is the sole supplier of the medicine? OA. 590 OB. $180 OC. $30 OD. $60 Price/Cost (5) 10 1 10 20 30 40 MR Demand 50 60 70 80 90 Quantity (units)Assume that one of the hot dog vendors successfully lobbies the city council to obtain the exclusive right to sell hot dogs within the city limits. This firm buys up all the rest of the hot dog vendors in the city and operates as a monopoly. Assume that this change doesn't affect demand and that the new monopoly's marginal cost curve corresponds exactly to the supply curve on the previous graph. Under this assumption, the following graph shows the demand (D), marginal revenue (MR), and marginal cost (MC) curves for the monopoly firm. Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and quantity of a monopolist. PRICE (Dollars per hot dog) 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0 0 45 Monopoly MC MR 90 135 180 225 270 315 QUANTITY (Hot dogs) D 360 405 450 Monopoly Outcome Deadweight Loss ?Consider the welfare effects when the industry operates under a competitive market versus a monopoly. On the monopoly graph, use the black points (plus symbol) to shade the area that represents the loss of welfare, or deadweight loss, caused by a monopoly. That is, show the area that was formerly part of total surplus and now does not accrue to anybody. Deadweight loss occurs when a monopoly controls a market because the resulting equilibrium is different from the competitive outcome, which is efficient. In the following table, enter the price and quantity that would arise in a competitive market; then enter the profit-maximizing price and quantity that would be chosen if a monopolist controlled this market. Market Structure Price Quantity (Dollars) (Hot dogs) Competitive Monopoly Given the summary table of the two different market structures, you can infer that, in general, the price is higher under a_______________, and the…
- You have been granted a monopoly in the avocado market. The market demand for avocados is Q = 2000 – 2P. Your cost structure is such that your total costs are TC = 1000+ 400Q. (limit: whatever needed) What is your profit maximizing price and quantity? Explain this in words and show it graphically. What are the profit, producer surplus and consumer surplus? The government is thinking about breaking your monopoly into ten identical firms and giving ownership to 10 random people. Correspondingly, each firm would have a fixed cost of $1000 and a marginal production cost of $400 per unit. In this perfectly competitive environment, what would be the equilibrium price and quantity? Explain this in words and show it graphically. What are the profit per firm, producer surplus and consumer surplus that correspond to your answer to part d)? How much would you be willing to pay to keep the government from taking your monopoly away? Explain.Intel is the world’s largest manufacture of semiconductor chips by revenue. During the 1990s, Intel became the dominant supplier of microprocessors for PCs and was known for aggressive and anti-competitive tactics in defense of its market position. Consider the market for Intel’s Pentium II processor, released in May 1997. Assume Pentium II enjoyed a monopoly in computer processors. Intel’s cost of production is characterized by function C = 10Q2, marginal cost MC = 20Q, while the market demand for the product is P = 400 − 10Q. Calculate Intel’s profit-maximizing quantity for its Pentium II processor. How much would Intel price its Pentium IIs?The graph shows the demand and cost conditions facing a perfectly competitive industry. If the industry is taken over by a monopoly, what is the deadweight loss that results from the behavior of the monopoly? The deadweight loss that results from the behavior of the monopoly is $ per year. >>> Remember that the quantity given on the x-axis is in thousands of pizzas. (...) 36- 32- 28- 24-23 20- 16- 12- 8- 4- 0- Price and cost (dollars per pizza) 0 12 8 15 MR 8 4 12 16 20 24 Quantity (thousands of pizzas per year) --+ 26 MC D L 28 Q
- Suppose a local cable company provides cable service to a rural community. The figure to the right illustrates the cable company's marginal cost of providing cable service along with the community's demand for cable TV. Assume the local cable company is a monopoly. When the company maximizes profits, consumer surplus equals $ (enter a numeric response using a real number rounded to one decimal place), and producer surplus equals $ Compared to the perfectly competitive market outcome, the cable company creates dead weight loss equal to $ Price and cost (dollars per cable subscription) 120- 110- 100- 90- 80- 70- 60- 50- 40- 30- 20- 10- to 10 20 MR D 30 40 50 60 70 80 Quantity of cable subscriptions MC 90 100 ON5. Denton Cheese Company (DCC) makes a unique variety of cheese they call Eagle Cheese. They sell it as a monopoly, but a government agricultural support program will pay DCC $7.50 per pound for as much cheese as DCC wants to sell to the government. The market demand for Eagle Cheese is the following: P = 12-.003Q The cost of making the cheese is as follows: C = 2Q+.002Q² If the goal is profit maximization, how much cheese should DCC sell to the market and what price should they charge? Also, how much should they sell to the government?Consider a market with a monopoly firm. Sales revenue of this firm is $15,960,000 total cost is $8,680,000 and average cost is $3.10 Another firm wants to enter the market and provide the same product at a lower price. To intimidate the potential competitor, the monopoly firm intends to use predatory pricing.By how much can this firm reduce the price of its product without losses? Enter your answer in the box below and round to two decimal places if necessary.