Question

2) On graph paper, set up a starting graph for a monopolist using demand, marginal revenue, marginal cost, and average total cost curves.

a. In the graph you drew, show what happens to the monopolisy's market graph if fixed costs increase, using a colored pencil. Show any curve shifts and the effects of those curves on output and product price.

b. In the same graph, using a second colored pencil identify the monopolist's profits after the change in fixed costs

Answer #1

A monopolist maximizes profit at the point where marginal cost curve intersects marginal revenue curve. Below this point equilibrium output is determined on X axis (Q) and price on Y axis (P) from demand curve and average cost from AC curve(C1). Profit = price minus average cost = Pink + Green box

Increase in fixed cost shifts average cost parallel upwards. P and Q remain same but profit decreases due to increases in average cost (C2). Profit = P - C2 = Pink box

In a graph paper, set up a starting graph for monopoly , using
demand, marginal revenue, marginal cost, and average total cost
curves.
Shows what happens to the monopolist's market graph if fixed
costs increase, using a colored pencil. Be sure to show any curve
shifts, and the effects of those shifts on the monopolists output
and product price.
Using a different colored pencil, identify the monopolists
profit after the change in fixed costs.

1. Show marginal cost, average cost, demand and marginal revenue
for a monopolist earning zero economic profit. Be very clear about
profit maximizing output.
2. Show what happens to a monopolist's profits when the price of
the fixed input, i.e., the rental rate, increases.

a) Given the demand curve for a monopolist: Qd = 60 - 2 P and
the marginal revenue curve: MR = 30 - Q. Marginal cost equals
average cost at $14. What is the price and quantity that the
profit-maximizing monopolist will produce? Graph these curves and
label the equilibrium points. (6 pts)
b) If this were a competitive industry, what price and quantity
would be produced? Show this on the above graph and show your work
(answers) below (3...

1) On graph paper set up starting graphs for a
competitive market and competitive firm in which the competitive
firm is making normal profits. include an average variable cost
curve in the competitive firm's graph.
a. What happens in the market graph if the price of a
substitute good increases?
b. How does the change in the market affect the firm's
level of production and profits?
c. What is likely to happen in the competitive market
after the little firms...

A. draw the demand and marginal revenue curves. Draw a vertical
line at the market price. To the left of the vertical line, show
the demand and marginal revenue curves for the firm before the
elasticity shifted. To the right, show the demand and marginal
revenue curves for the more inelastic assumption. Where does the
kink in the demand curve occur? What happens to the marginal
revenue curve
B. an oligopolist who believes that if she decreases her price,
her...

A monopolist faces the following demand curve, marginal
revenue curve, total cost curve and marginal cost curve for its
product: Q = 200 - 2P
MR = 100 - Q
TC = 5Q MC = 5
a. What is the profit maximizing level of output?
b. What is the profit maximizing price? c. How much profit
does the monopolist earn?

Graph a Monopoly making a loss. In this graph of a monopolist, I
want you also to show the perfectly competitive comparison price
& quantity as well as the area of "dead weight loss". Make sure
to include the cost curves, the demand and marginal revenue curve
(remember 1/2 the slope of the demand curve).

5. The marginal revenue curve for a monopolist is greater than
the price because the monopolist faces a downward sloping demand
curve for its product. True or False?
8. In a competitive industry, barriers to entry prevent new
suppliers from entering the market. True or
False?
9. Economies of scale occur when the long-run average cost curve
slopes downward. True or False?
11. If a market changes from perfectly competitive to
monopolistic, output will increase and the price will decrease,...

A monopolist faces a demand curve P= 24 – 2Q, where P is
measured in dollars per unit and Q in thousands of units and MR=24
– 4Q. The monopolist has a constant average cost of $4 per unit and
Marginal cost of $4 per unit. a. Draw the average and marginal
revenue curves and the average and marginal cost curves on a graph.
b. What are the monopolist’s profits-maximizing price and quantity?
c. What is the resulting profit? Calculate...

19. To maximize profits, a single-price monopolist will produce
where Marginal costs = Marginal revenue: establishing a price that
is greater than their marginal cost.
True
False
20. As a consequence of the perfectly competitive firm producing
the quantity of output at which: price equals marginal revenue and
marginal cost, it will achieve "allocative efficiency" in the
deployment of societies scarce resources.
True
False
21. In the "long-run," the perfect competitive achieves
technical efficiency and the firm will produce at:...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 4 minutes ago

asked 10 minutes ago

asked 19 minutes ago

asked 25 minutes ago

asked 26 minutes ago

asked 35 minutes ago

asked 35 minutes ago

asked 35 minutes ago

asked 40 minutes ago

asked 50 minutes ago

asked 1 hour ago

asked 1 hour ago