What are the principles that guide the government's antitrust policy? (Select all that apply) O A. The protection of competition O B. The control of prices O C. The profitability of monopolies O D. Lower prices for consumers
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- 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 MonolpolyWhat might some of the negatives of deregulation be?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.
- What stops oligopolists from acting together as a monopolist and earning the highest possible level of profits?Table 15-9 Consider the following demand and cost information for a monopoly. Quantity Total Cost $6 $20 $34 $48 $62 $76 10 1 2 3 14 QUESTION 30 15 Refer to Table 15-9. What is the marginal revenue of the 3rd unit? O a. $20 b. $28 O c. $4 O d. $12 Price $32 $28 $24 $20 $16 $12 QUESTION 31 The fundamental source of monopoly power is O a. rising average total costs. O b. low fixed costs. O c. barriers to entry. O d. many buyers and sellers.1. In the United States, Antitrust laws were adopted in order to provide government the ability to break up regulatory capture. O block certain mergers that are determined to be uncompetitive. O block certain mergers and break up large firms into smaller ones. force the firm to sell off the profitable parts of its operation.
- Qu 1) Consider that a monopoly is the single firm in a market. 1. Show the production and price levels in this market using a graph. 2. Discuss the differences between perfect competition and monopoly using the graph in part a and using words. 3. Assume that the price elasticity of demand increased in this market. Show the new equilibrium price, quantity, and monopoly by drawing a new graph. Discuss the changes using words 4. Why does a change in elasticity of demand affect the monopoly? Discuss only using words. DO NOT drawa new graph. Ahm 1213 Why do monopolies lack productive efficiency? A Because barriers to entry eliminate competition BO Because they are unable to achieve economies of scale Because investments in innovation are costly DO Because they produce at the bottom of the average cost curve3. The cartel of copper exporting countries is called COPEC. As part of an international trade agreement, the United States has agreed to buy all the copper that COPEC wants to sell to the United States at a constant price of $100 per tonne. COPEC also sells copper in Europe at a price of $150 per tonne. COPEC acts just like a monopolist; if it finds it is profit maximising to sell in the United States at $100 per tonne and simultaneously to sell in Europe for $150 a tonne, what is the price elasticity of demand of COPEC's copper in the European market? Carefully explain all the steps in the derivation of the value of the elasticity including the underlying economic theory approach behind it.
- 19 Which of the following describes how a natural monopoly is graphically illustrated? A When producing small quantities, the demand is higher than long-run average cost. BO The long-run average cost curve is U-shaped. CO When producing large quantities, the long-run average cost is greater than demand. The demand curve intersects the long-run average cost curve at a point where the long-run average cost curve is downward sloping. D4. A monopolist is faced with the following cost and revenue curves: $ 80 70 60 50 40 30 20 10 0 -10 0 -20 100 200 300 400 FMC 500 AC AR 600 MR Quantity (a) What is the maximum-profit output?. (b) What is the maximum-profit price? (c) What is the total revenue at this price and output? (d) What is the total cost at this price and output? (e) What is the level of profit at this price and output? (f) If the monopolist were ordered to produce 300 units, what would be the market price? (g) How much profit would now be made? (h) If the monopolist were faced with the same demand, but average costs were constant $60 per unit, what output would maximise profit? (i) What would be the price now? (j) How much profit would now be made? (k) Assume now that the monopolist decides not to maximise profits, but instead sets a price of $40. How much will now be sold?.