Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
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Question
Chapter 15.5, Problem 5QQ
To determine
The reason for the existence of monopoly in the market.
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Monopolies cause a lot of deadweight losses. Describe way through which policy makers can respond to inefficiencies caused by monopolies in an economy. List potential problems associated with each of these policy response mechanisms and the portfolio of the factors that you have consulted
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Chapter 15 Solutions
Principles of Economics, 7th Edition (MindTap Course List)
Ch. 15.1 - Prob. 1QQCh. 15.2 - Prob. 2QQCh. 15.3 - Prob. 3QQCh. 15.4 - Prob. 4QQCh. 15.5 - Prob. 5QQCh. 15 - Prob. 1QRCh. 15 - Prob. 2QRCh. 15 - Prob. 3QRCh. 15 - Prob. 4QRCh. 15 - Prob. 5QR
Ch. 15 - Prob. 6QRCh. 15 - Prob. 7QRCh. 15 - Prob. 8QRCh. 15 - Prob. 1QCMCCh. 15 - Prob. 2QCMCCh. 15 - Prob. 3QCMCCh. 15 - Prob. 4QCMCCh. 15 - Prob. 5QCMCCh. 15 - Prob. 6QCMCCh. 15 - Prob. 1PACh. 15 - Prob. 2PACh. 15 - Prob. 3PACh. 15 - Prob. 4PACh. 15 - Prob. 5PACh. 15 - Prob. 6PACh. 15 - Prob. 7PACh. 15 - Prob. 8PACh. 15 - Prob. 9PACh. 15 - Prob. 10PACh. 15 - Prob. 11PA
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- To regulate natural monopolies, the governments can choose amongst the following options: Select all that apply □ A. Set the price to equal Marginal Cost B. Set the price to equal total cost C. Set the price to equal Average total cost □ D. Break the monopolies into several smaller companiesarrow_forwardWe expect that monopolies will set a price ___________ their marginal cost.arrow_forwardDiscuss some (social welfare) factors that contribute to economic inefficiency when governments impose taxes on monopoliesarrow_forward
- The single-price monopoly equilibrium is Pareto ineffcient and leads to a positive deadweight loss. However, monopolies also have certain benefits in terms of technical progress, innovation, unique products/services and fostering of entrepreneurship. Do you agreee with the view that monopolies should be heavily regulated by the government ? Or should governments intervene only as and when necessary ?arrow_forwardtrue or false Government regulation can easily solve all of the problems associated with natural monopolies.arrow_forwardIs it feasible to prohibit monopolies in all markets?arrow_forward
- true or false In the case of natural monopolies, economists argue that production is more efficient with several smaller firms rather than one large firm.arrow_forward8. Natural monopoly analysis The following graph gives the demand (D) curve for SG LTE services in the fictional town of Streamship Springs. The graph also shows the marginal revenue (MR) curve, the marginal cost (MC) curve, and the average total cost (ATC) curve for the local 5G LTE company, a natural monopolist. On the following graph, use the black point (plus symbol) to indicate the profit-maximizing price and quantity for this natural monopolist. PRICE (Dollars per gigabyte of data) 20 18 16 14 12 10 8 2 0 0 1 MR 2 3 4 5 67 QUANTITY (Gigabyles of data) 8 ATC MC- 9 10 Monopoly Outcomearrow_forwardWhich two kinds of monopolies exist? Which is more economically efficient? Why?arrow_forward
- Does a monopolist have a supply curve? Explain your answer. What are the different types of price discrimination? Differentiate between an oligopoly and a monopolistic competition (i.e. number of firms and the degree of product differentiation). How are skilled and unskilled workers in an economy likely to be affected if the firms adopt skill-biased technologies?arrow_forwardcan you find examples of monopolies or near monopolies whose position can be attributed to public intervention? Elaborate on possible costs of monopoly in those cases.arrow_forwardThere is a monopolist in a market for a particular type of consumer goods. It is costly to create new types of products (brands) in this market, but consumers have different taste and thus some will prefer the new brand. Will the monopolist create too few brands or too many? Explain.arrow_forward
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