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 (S = MC) curves in the market for hot dogs.Place the black point (plus symbol) on the graph to indicate the market price and quantity that will result from perfect competition.Perfect Competition5.04.5PC Outcome4.03.53.02.5S=MC2.01.51.0 +0.5D3570105140175210245280315350QUANTITY (Hot dogs)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.PRICE (Dollars per hot do g) 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.Monopoly5.04.5Monopoly Outcome4.03.53.02.5MC2.01.51.00.5DMR3570105140175 210245280315350QUANTITY (Hot dogs)In the following table, enter the price and quantity that would arise in a perfectly competitive market; then enter the profit-maximizing price andquantity that would be chosen if a monopolist controlled this market.PriceQuantityMarket Structure(Dollars)(Hot dogs)Perfect CompetitionMonopolyGiven the summary table of the two different market structures, you can infer that, in general, the price is lower under aand the quantity is lower under aPRICE (Dollars per hot dog)

The graph below shows the profit-maximizing quantity and price of perfect competition. It would be…

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. Monopoly 5.0 4.5 Monopoly Outcome 4.0 3.5 3.0 25 MC 20 1.5 1.0 0.5 MR 35 70 105 140 175 210 245 280 315 350 QUANTITY (Hot dogs) In the following table, enter the price and quantity that would arise in a perfectly competitive market; then enter the profit-maximizing price and quantity that would be chosen if a monopolist controlled this market. Price Quantity Market Structure (Dollars) (Hot dogs) Perfect Competition Monopoly Given the summary table of the two different market structures, you can infer that, in general, the price is lower under a and the quantity is lower under a PRICE (Dollars per hot dog)