Principles of Economics 2e
2nd Edition
ISBN: 9781947172364
Author: Steven A. Greenlaw; David Shapiro
Publisher: OpenStax
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Textbook Question
Chapter 9, Problem 33P
Draw a monopolist’s demand curve, marginal revenue, and marginal cost curves. Identify the monopolist’s profit-maximizing output level. Now, think about a slightly higher level of output
According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?
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Draw a monopolist’s demand curve, marginal revenue, and marginal cost curves. Identify the monopolist’s profit-maximizing output level, let’s call them Q0 and P0. Now, think about a slightly higher level of output (say Q0 + 1). According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?
Suppose a profit-maximizing monopolist has total cost and marginal cost as follow TC = 8Q + 10 and MC = 8. It faces the demand curve P = 20-1/5Q. a) What is the equilibrium price and output?b) What is the total profit?c) Calculate the consumer surplus, producer surplus, and deadweight loss if the firm acts as a monopolist. Illustrate your answer with a diagram
Suppose a monopolist faces a market demand that is the first two columns in the table below. Also, in the short run,
assume that Total Fixed Cost equals $100 and the monopolist has Total Variable Cost according to the table. Find Total
Revenue for each price and quantity combination, and then Marginal Revenue as price falls and quantity increases. Fill in
the rest of the costs in the table and find profit at each price and quantity combination as the difference between Total
Revenue and Total Cost. If profit is less than zero that indicates a loss. What is the maximum profit you found in this table?
At what quantity and price combination is profit maximized for this monopolist?
Next, verify this result by using Marginal Analysis to find the profit maximizing price and quantity combination. For each
quantity, ask yourself if Marginal Revenue exceeds Marginal Cost. If it does, then profits would be increased by producing
that quantity. As you go down the table to higher quantities, stop…
Chapter 9 Solutions
Principles of Economics 2e
Ch. 9 - Classify the following as a government-enforced...Ch. 9 - Classify the following as a government-enforced...Ch. 9 - Suppose the local electrical utility, a legal...Ch. 9 - If Congress reduced the period of patent...Ch. 9 - Suppose demand for a monopolys product falls 50...Ch. 9 - Imagine a monopolist could charge a different...Ch. 9 - How is monopoly different from perfect...Ch. 9 - What is a barrier to entry? Give some examples.Ch. 9 - What is a natural monopoly?Ch. 9 - What is a legal monopoly?
Ch. 9 - What is predatory pricing?Ch. 9 - How is intellectual property different from other...Ch. 9 - What legal mechanisms protect intellectual...Ch. 9 - In what sense is a natural monopoly natural?Ch. 9 - How is the demand curve perceived by a perfectly...Ch. 9 - How does the demand curve perceived by a...Ch. 9 - Is a monopolist a price taker? Explain briefly.Ch. 9 - What is the usual shape of a total revenue curve...Ch. 9 - What is the usual shape of a marginal revenue cuwe...Ch. 9 - How can a monopolist identify the...Ch. 9 - How can a monopolist identify the...Ch. 9 - When a monopolist identifies its profit-maximizing...Ch. 9 - Is a monopolist allocatively efficient? Why or why...Ch. 9 - How does the quantity produced and price charged...Ch. 9 - ALCOA does not have the monopoly power it once...Ch. 9 - Why are generic pharmaceuticals significantly...Ch. 9 - For many years, the Justice Department has tried...Ch. 9 - Intellectual property laws are intended to promote...Ch. 9 - Imagine that you ale managing a small firm and...Ch. 9 - If a monopoly firm is earning profits, how much...Ch. 9 - Return to Figure 9.2. Suppose P0 is 10 and P1 is...Ch. 9 - Draw the demand curve, marginal revenue, and...Ch. 9 - Draw a monopolists demand curve, marginal revenue,...
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