Consider the figure to the right. The quantity Q₁ is 1,600 units, the price P₁ is $3 per unit, and the vertical distance to point C is $9 per unit. What is the dollar amount of the losses earned by this natural monopolist when its price is equal to its marginal cost of producing Q₁ units? Using the rectangle drawing tool, show the economic losses earned by this natural monopolist when its price is equal to its marginal cost of producing Q₁ units. Label this area "Losses." Carefully follow the instructions above, and only draw the required object.

Consider the figure to the right. The quantity Q₁ is 1,600 units, the price P₁ is $3 per unit, and the vertical distance to point C is $9 per unit. What is the dollar amount of the losses earned by this natural monopolist when its price is equal to its marginal cost of producing Q₁ units? Using the rectangle drawing tool, show the economic losses earned by this natural monopolist when its price is equal to its marginal cost of producing Q₁ units. Label this area "Losses." Carefully follow the instructions above, and only draw the required object.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter16: Government Regulation

Section: Chapter Questions

Problem 10E

See similar textbooks

Similar questions

Consider the figure to the right. The quantity Q₁ is 2,200 units, the price P₁ is $4 per unit, and the vertical distance to point C is $9 per unit. What is the dollar amount of the losses earned by this natural monopolist when its price is equal to its marginal cost of producing Q₁ units? Using the rectangle drawing tool, show the economic losses earned by this natural monopolist when its orice is equal to its marginal cost of producing Q₁ units. Label this area 'Losses. Carefully follow the instructions above, and only draw the required object. -C Dollars per unit P₁ C Q₁ D Quantity per time period LMC LAC
Give typing answer with explanation and conclusion Suppose that a monopolist whose marginal cost curve is MC(Q)=Q faces the demand curve P=10-2Q. What is monopolist's profit-maximizing quantity, profit-maximizing price, the total surplus (under monopoly profit maximization), also called the "monopoly market surplus," and if the monopolist can perfectly price discriminate, then deadweight loss equals...?
. Let the demand curve for a monopolist’s product be P = 100 – 2Qd and the marginal cost of production be constant at MC = 10. Suppose that the firm considers moving from a uniform pricing strategy to a two-block tariff where the first block provides 15 units at a price of P1 = $70 and the second block provides an additional 15 units at a price of P2 = $40. How much does the monopolist’s profit rise with this scheme?
Suppose that a monopolist’s demand curve is given by P(y) = 28−3y and its marginal cost is given by MC(y) = y, where y denotes output.a. Find the profit-maximizing quantity and price for this monopolist. Illustrate your answer with a graph.b. Calculate the consumer surplus, producer surplus and thedeadweight loss of this monopoly. (You may find it helpful to refer tothe graph you drew for part a.)c. Carefully explain why a monopoly creates a deadweight loss.
O OO The above graph shows the market demand function for a product. Assume that the market is served by a perfectly-price-discriminating monopolist with a constant marginal cost of production equal to $4 (MC = $4) and no fixed cost (FC = 0). The deadweight loss equals: DWL - $72 DWL - $0 DWL- -$48 DWL - $84 DWL-$36 $30 $28 $26 $24 $22 $20 Question 23 $18 $16 $14 $12 $10 $8 $6 $4 $2 $0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Effect of tax on economic activity Consider a monopolist who pays $3 tax per unit. Suppose the tax is reduced to $1 per unit. What would happen to the price, output and profit of the monopolist? Illustrate on a graph. Assume that the market demand for the output is linear and the monopolist has an upward sloping marginal cost curve.
Give typing answer with explanation and conclusion A monopolist has a demand curve given by P = 88 − Q and a total cost curve given by TC = 34 + Q2. The associated marginal cost curve is MC = 2Q. Suppose the monopolist also has access to a foreign market in which he can sell whatever quantity he chooses at a constant price of 60. How much will he sell in the foreign market? What will his new quantity and price be in the original market?
Consider the figure to the right. The quantity Q₁ is 2,400 units, the price P₁ is $6 per unit, and the vertical distance to point C is $10 per unit. What is the dollar amount of the losses earned by this natural monopolist when its price is equal to its marginal cost of producing Q₁ units? Using the rectangle drawing tool, show the economic losses earned by this natural monopolist when its price is equal to its marginal cost of producing Q₁ units. Label this area 'Losses.' Carefully follow the instructions above, and only draw the required object. Dollars per unit P₁ B Q₁D Quantity per time period LMC LAC
Suppose a monopoly has a cost curve equal to C= 6400 + 100a. The firm's demand curve is p= 500 - 4Q. (Round all nurmeric responses to two docimal places.) What is the monopoly's unregulated profit-maximizing quantity? What is the unregulated profit-maximizing price? $. What is the monopoly's profit? $ What would be the deadweight loss? 5
A monopolist can produce at constant average total and marginal cost of ATC = MC = $20. (Constant ATC = MC implies that there are no fixed costs.) The firm faces a market demand curve given by QD = 40 - P. The monopolist's marginal revenue curve is given by MR = 40 - 2QD. Graph this situation, then calculate the monopolist's profit-maximizing price-quantity and the monopolist's profits. What output level would be produced by a corresponding perfectly competitive industry? What would be the price level? Calculate the "deadweight losses" from monopolization of the industry. Show the DWL on the graph.
Hot Air Balloon Rides is a single-price monopoly. Columns 1 and 2 of the table set out the market demand schedule and columns 2 and 3 set out the total cost schedule. Now suppose that the government places a fixed tax on Hot Air's profit of $40 a month. Calculate Hot Air's new profit-maximizing output and price. When Hot Air is producing its new profit-maximizing output, the number of rides it produces is a month and the profit-maximizing price of a ride is $ >>> Answer to 1 decimal place. CH Price (dollars per ride) 150 140 130 120 110 100 Quantity (rides per month) 0 1 2345 Total cost (dollars per month) 50 175 310 455 610 775
Barbara is a producer in a monopoly industry. Her demand curve and total cost curve are given by Q = 160 - 4P and TC = 4Q. Barbara will produce ✓ units. Barbara will charge a price of Barbara will make a profit of Suppose now the government imposes a tax of 4 dollars on each unit sold. With the tax: Barbara will produce ✓ units. Barbara will receive a price per unit of higher). Barbara will make a profit of In addition to the tax, suppose the government imposes a business levy (a fixed cost) of $500. With this levy: Barbara will produce Barbara will charge a price of Barbara will make a profit of ✓. Note: we're looking for the Barbara receives, not the price consumers pay (which will be ✓ units. ✓. Note: we're looking for the Barbara receives, not the price consumers pay (which will be higher).