Question

Consider the special case and assume that for a natural monopolist the marginal cost is constant...

Consider the special case and assume that for a natural monopolist the marginal cost is constant and there is high fixed cost. Show graphically how the natural monopolist maximizes economic profits. At the point of profit maximization, what is the monopoly price and what is the monopoly quantity? Suppose now the natural monopoly is regulated. What is the best regulated price? What happens to economic profits with the regulation? How is the consumer surplus changed due to the regulation? Show graphically.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Explain the true or false statement: A natural monopolist regulated to price at marginal cost will...
Explain the true or false statement: A natural monopolist regulated to price at marginal cost will still make profits.
A natural​ monopoly's output is less if it is regulated with A. a marginal cost pricing...
A natural​ monopoly's output is less if it is regulated with A. a marginal cost pricing rule than if it is unregulated. B. a marginal cost pricing rule than if it is regulated with an average cost pricing rule. C. an average cost pricing rule than if it is unregulated. D. an average cost pricing rule than if it is regulated with a marginal cost pricing rule. E. More information about the​ firm's demand is needed to determine how its...
Suppose a monopolist faces consumer demand given by P=600−22Q with a constant marginal cost of ​$20...
Suppose a monopolist faces consumer demand given by P=600−22Q with a constant marginal cost of ​$20 per unit​ (where marginal cost equals average total cost. assume the firm has no fixed​ costs). If the monopoly can only charge a single​ price, then it will earn profits of ​ ​(Enter your response rounded as a whole​ number.) ​Correspondingly, consumer surplus is ​However, if the firm were to practice price discrimination such that consumer surplus becomes​ profit, then, holding output constant at...
A monopolist faces inverse demand p = 40 − 2q and has a marginal cost of...
A monopolist faces inverse demand p = 40 − 2q and has a marginal cost of 20. (a) [20 points] What output will the monopolist produce? (b) [10 points] What are consumer surplus, monopoly profits, and deadweight loss? (c) [10 points] Suppose the monopolist’s costs rise to 90. What are consumer surplus, monopoly profits, and deadweight loss now? Please help to explain part (c).
Assume that electricity production has been done by several regional firms in the U.S. each operating...
Assume that electricity production has been done by several regional firms in the U.S. each operating as a pure monopoly. Explain and graphically illustrate how the electrical monopolist would determine its profit maximizing price and output level. (Label Pm and Qm) Identify any area of consumer and/or producer surplus for the profit maximizing monopoly. Identify the deadweight loss for the monopolist. Now assume the federal government imposes a regulation on the monopoly. Draw a new monopoly graph for part 2....
one solution to the problems of marginal cost pricing of a regulated natural monopolist is average...
one solution to the problems of marginal cost pricing of a regulated natural monopolist is average cost pricing. in this model. the monopolist is allowed to price its production at average total cost. how does average cost pricing differ from marginal cost pricing? does this solution maximize social well being?
1. Show marginal cost, average cost, demand and marginal revenue for a monopolist earning zero economic...
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.
The demand for the goods offered by a monopolist can be determined by the inverse demand...
The demand for the goods offered by a monopolist can be determined by the inverse demand function ?(?) = 8 - 2/3 q, where ? describes the offered is quantity. The cost function of the monopolist is: ?(?) = 1/3q2 + 2q + 1 a) Please calculate the profit-maximizing production quantity ?M, the profit-maximizing prize ?M and the corresponding profit ?M of the monopolist. b) Now please display this situation graphically and then determine the Consumer and producer surplus from...
Inverse Demand Equation: P=160–4Qd Marginal Revenue = 160-8Qd Marginal Costs = $0 What is price and...
Inverse Demand Equation: P=160–4Qd Marginal Revenue = 160-8Qd Marginal Costs = $0 What is price and quantity under perfect competition? What price would a monopoly charge? How much will it produce? What is the deadweight loss due to monopoly? If the monopolist can practice perfect price discrimination what is consumer surplus? What is producer surplus?
A monopoly is facing inverse demand given by P = 40−0.5Q and marginal cost given by...
A monopoly is facing inverse demand given by P = 40−0.5Q and marginal cost given by MC = 7+0.1Q. Illustrate these on the graph and answer the questions below. (a) If the monopolist is unable to price discriminate, what is the profit-maximizing quantity? What is the price? What is consumer surplus? Producer surplus? Deadweight loss? (b) Suppose instead the monopolist is able to perfectly price discriminate. How many units will be sold? What is consumer surplus? Producer surplus? Deadweight loss?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT