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 StructurePriceQuantity(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 monopoly), and the quantity is higher under a (competitive market or monopoly). * 3 parts to this question* Fill in 2 graph Fill in chartFill in the blank Consider the daily market for hot dogs in a small city. Suppose that this market is in long-run competitive equilibrium, with many hot dog stands inthe city, each one selling the same kind of hot dogs. Therefore, each vendor is a price taker and possesses no market power.The following graph shows the demand (D) and supply curves (S = MC) in the market for hot dogs.%3DPlace the black point (plus symbol) on the graph to indicate the market price and quantity that will result from competition. Use the green point(triangle symbol) to shade the area that represents consumer surplus, and use the purple point (diamond symbol) to shade the area that representsproducer surplus.Competitive Market5.04.5PC Outcome4.0A3.53.0Consumer Surplus2.52.0Producer SurplusS=MC1.51.00.5D50100150200250300350400450500PRICE (Dollars per hot dog) 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. Thisfirm 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 thenew monopoly's marginal cost curve corresponds exactly to the supply curve on the previous graph. Under this assumption, the following graph showsthe 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. Use the green points(triangle symbol) to shade the area that represents consumer surplus, and use the purple points (diamond symbol) to shade the area that representsproducer surplus.Monopoly5.04.5Monopoly Outcome4.0A3.53.0Consumer Surplus2.52.0Producer SurplusMC1.51.0Deadweight Loss0.5MR50100150200250300350400450500QUANTITY (Hot dogs)PRICE (Dollars per hot dog)

A perfectly competitive firm is a price taker and maximizes profit by producing at D=MC A monopoly…

Answered: Consider the daily market for hot dogs…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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 monopoly), and the quantity is higher under a (competitive market or monopoly).

* 3 parts to this question*

Fill in 2 graph

Fill in chart

Fill in the blank

Consider the daily market for hot dogs in a small city. Suppose that this market is in long-run competitive equilibrium, with many hot dog stands in
the city, each one selling the same kind of hot dogs. Therefore, each vendor is a price taker and possesses no market power.
The following graph shows the demand (D) and supply curves (S = MC) in the market for hot dogs.
%3D
Place the black point (plus symbol) on the graph to indicate the market price and quantity that will result from competition. Use the green point
(triangle symbol) to shade the area that represents consumer surplus, and use the purple point (diamond symbol) to shade the area that represents
producer surplus.
Competitive Market
5.0
4.5
PC Outcome
4.0
A
3.5
3.0
Consumer Surplus
2.5
2.0
Producer Surplus
S=MC
1.5
1.0
0.5
D
50
100
150
200
250
300
350
400
450
500
PRICE (Dollars per hot dog)

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. Use the green points
(triangle symbol) to shade the area that represents consumer surplus, and use the purple points (diamond symbol) to shade the area that represents
producer surplus.
Monopoly
5.0
4.5
Monopoly Outcome
4.0
A
3.5
3.0
Consumer Surplus
2.5
2.0
Producer Surplus
MC
1.5
1.0
Deadweight Loss
0.5
MR
50
100
150
200
250
300
350
400
450
500
QUANTITY (Hot dogs)
PRICE (Dollars per hot dog)

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