The monopoly and price elasticity of a demand .

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Answer 1

Question

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

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Students have asked these similar questions

10. Is the demand for a life-saving drug like Daraprim (Front Page Economics "Drugmaker Hikes Price of AIDS Drug 5,000 Percent!") likely to be elastic or inelastic? How does that affect the pricing decision of a monopolist? LO10-1 IT qu

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 $

The 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 E

Answer 2

Question

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

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Answer 3

Question

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

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Answer 4

Question

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

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Answer 5

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

Answer 6

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

Answer 7

Chapter 12, Problem 1DQ

To determine

The monopoly and price elasticity of a demand.

Answer 8

Expert Solution & Answer

Explanation of Solution

We could possibly say that the mentioned statement is true. There is pure monopoly which is nonexistent. Let us say, that if you need to send a letter, then the only option we think of is the postal service. But in case, the postal service increases the charges of delivering a letter to the adjacent town, to two days by $15, then we will look for alternate options like using a courier, phone or fax the letter. But within the conscious limits, even if the rates are doubled, we have no substitute that can live up to the mark of a postal service, that too at a commensurate rate.

The same can be explained about pure monopoly, when we consider local electricity provider companies in any given town. If you need electricity for lights, fans, etc you can deal only with a sole company. So, it enjoys pure monopoly, even though other sources of energy like oil or kerosene are used for the basic purposes like heating or for the lights, but these are never going to be a convenient option for end users.

The idea of cross elasticity of the demand is used to gauge the presence of alternatives for the commodity of a monopoly company. In case, the cross elasticity of the demand is higher than one, then the demand faced by that monopoly is elastic with respect to the alternate commodities, and the company will have lesser control over price of the commodity, than if the cross elasticity of the demand were inelastic. In other words, the monopoly faces contest from the producers of alternative commodities.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Concept Introduction:

Cross elasticity of demand: Cross price elasticity refers to the percentage change in the demand for goods and services due to the change occurred in the price of other related goods.

Monopoly: It is a market situation, in which only one producer or seller exists in the market. There is a restriction in the entry to the business.

Answer 12

Ch. 12.4 - The MR curve lies below the demand curve in this...Ch. 12.4 - Prob. 2QQ Ch. 12.4 - Prob. 3QQ Ch. 12.4 - Prob. 4QQ Ch. 12 - Prob. 1DQ Ch. 12 - Prob. 2DQ Ch. 12 - Prob. 3DQ Ch. 12 - Prob. 4DQ Ch. 12 - Prob. 5DQ Ch. 12 - Prob. 6DQ

The monopoly and price elasticity of a demand .

The monopoly and price elasticity of a demand.

Explanation of Solution

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