True or false: Given the total cost function to produce a good, TC = 40 + 20Q a cartel can produce a good at a lower cost per unit than a monopoly. O True O False
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- Would you expect the kinked demand curve to be more extreme (like a right angle) or less extreme (like a normal demand curve) if each film in the cartel produces a near-identical product Like OPEC and petroleum? What if each film produces a somewhat different product? Explain your reasoning.What had Alcoa done that made the judge find it guilty of being a monopoly? a. Alcoa had used predatory pricing to keep new firms out of its marketb. Alcoa had engaged in price fixingc. Alcoa had never tried to monopolize the aluminum market, but its policy of building capacity to meet future demand had the effect of giving it a large market share that made it a de facto monopolyd. Alcoa had used tying contracts to drive rivals out of the markete. Alcoa had used price discrimination to acquire a monopoly Following its near bankruptcy in 1922, General Motors pioneered the decentralized management structure in which the firm was reorganized into semi-independent profit centers. Vice-presidents were appointed to manage these profit centers and were told that their bonuses would depend on the profitability of their division. This reorganization was designed to a. reduce management costsb. better capture economies of scalec. create a ratchet effect that would drive managers to perform…You are the manager for a monopoly with costs, demand, and marginal revenue as in the graph at the top on Figure 1.a. Does the fact that you operate in a monopoly always guarantee that you can achieve higher pro ts by increasing the price? Explain.b. Draw the area representing the pro ts on the top graph on Figure 1.c. Suppose one of your suppliers just announced an increase in prices for a specific part that your product requires. What should the impact be to each of the curves on the top graph of Figure 1? Explain carefully.d. Suppose economic conditions change in such a way that the demand curve for your company shifts left.i. Draw a demand curve on the bottom graph on Figure 1 that leads to zero economic profits.ii. Draw a demand curve on the bottom graph on Figure 1 such that any further leftward demand shift will cause you to shutdown.
- The graph shows the average cost, marginal cost, demand, and marginal revenue curves for a monopoly firm. If the firm produces 45 units of output per day, it Price Average (dollars Marginal cost per unit) 10 cost 8 4 Demand Marginal revenue 10 20 30 40 45 Quantity (units per day) Select one: O a. will be maximizing profit. O b. will be able to increase profit by producing less per day. O c. will charge a price that exceeds its marginal cost. O d. will be able to increase profit by producing more per day.500 450 400 出350 300 250 是 200 150 LRAC 100 MC 50 MR 3 4 Quantity (hundreds of trips per month) If a marginal cost pricing rule is imposed on the single-price natural monopoly in the figure above, then the deadweight loss will be per month. If a marginal cost pricing rule is imposed on the single-price natural monopoly in the figure above, then the deadweight loss will be per month. $20,000 O so $40,000 O$80,000 $45,000 $5,000 Price and costs (dollars per trip)Why is this true?: When a monopoly chooses a quanity or price combination that is on the price inelastic portion of the linear market demand cuve, it is not maximizing profit. Explain why.
- Since the bell pepper market consists of a single firm, that firm is actually a monopoly. What is the quantity of bell peppers sold by the monopolist? Here are the previous tables, reprinted for your convenience: That firm's marginal cost schedule is: 0 |1 12 3 4 5 Furthermore, assume that the market demand is given by POHANS 11 3 Less than 2 2 Between 2 and 3 MC 13 5 7 9 11 Quantity demanded 1 2 3 4 5Table 15-1 The following table provides information on the price, quantity, and average total cost for a monopoly. Average Total Cost (Dollars per unit) O a. $40 O b. $10 O c. $30 O d. $20 Price (Dollars per unit) 24 18 12 6 0 Refer to Table 15-1. What is the maximum profit that the monopolist can earn? Quantity (Units) 0 5 10 15 20 14.00 11.00 10.67 11.00What is a defining characteristic of a natural monopoly? O horizontal total cost curve economies of scale over a very large range of output O strong patents that prevent any competition O marginal costs above the average cost
- The provided table furnishes details on price, quantity, and average total cost for a monopoly. To maximize profits, the firm should produce: Price $5 $4 $3 $2 $1 $0 Output=15 Output=5 Output-10 O Output-20 Output 0 5 10 15 20 25 ATC $1.00 $0.75 $0.67 $0.70 $0.502 Refer to the following table. This information reflects the demand curve and the average cost curve for a firm that is a natural monopoly. What is this firm's marginal revenue when price is dropped from $13 to $11? Price Quantity Demanded LRAC $13 1 $10.50 $1 2 $9.75 $9 3 $9.50 $7 4 $9.625 $5 5 $10.30 A $9.75 $9 CO $11 DO $10.50We have learned the definition of monopoly as a market with one seller. Let's take some time to understand what that means, and how it can come about. What are some of the reasons that a market could be a monopoly? What is giving the monopolist their exclusive position in the market? Everyone should discuss a few reasons and/or examples of how a monopoly can come into existence. Typically the model of Monopoly predicts that all customers are charged the same price and that the monopolist selects the quantity and price combination from the market demand curve that maximizes profit. However, there are times where a monopolist may at least attempt to charge different prices for the exact same product depending on each consumer's willingness and ability to pay. In this case the monopolist might offer the product at a lower price to those who would otherwise not buy it, thus increasing quantity consumed in the market and reducing some of what is called the dead weight loss of monopoly.…
