Refer to Figure 15-8. Use the figure above to answer the following questions
a. Identify the curves labeled A and B. Identify the curve which contains both point Y and point Z. Identify the curve which contains both point V and point W.
b. What is the profit-maximizing quantity and what price will the monopolist charge?
c. What area represents total revenue at the profit-maximizing output level?
d. What area represents total cost at the profit-maximizing output level?
e. What area represents profit?
f. What is the profit per unit (average profit) at the profit-maximizing output level?
g. If this industry was organized as a perfectly competitive industry, what would be the profit-maximizing price and quantity?
h. What area represents the deadweight loss as a result of a monopoly?
a. A = Demand curve; B = Marginal revenue curve; The curve which contains both points Y and Z = Marginal cost curve; The curve which contains both points V and W = Average total cost curve.
b. Quantity = Q2 units; Price = P3
c. Area 0P3XQ2
d. Area 0P0VQ2
e. Area P0P3XV
f. P3 - P0
g. Quantity = Q4 and Price = P2
h. The triangle XYZ
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A shortage occurs in a market when:
A) supply exceeds demand. B) price is lower than the equilibrium price. C) price is higher than the equilibrium price. D) the marginal utility of consumption is negligible.
Answer the following statements true (T) or false (F)
1. Firms in monopolistic competition sell a similar but differentiated product. 2. 3. 4. 5.
The nominal exchange rate:
A. expresses the value of goods in one country in terms of the same goods in another country. B. is the stated rate at which one country's currency can be traded for another country's goods and services. C. is the stated rate at which one country's currency can be traded for another country's currency. D. expresses the value of goods in one country in terms of another country's currency.
In the long run, equilibrium for a monopolist is when
A. the short-run and long-run average cost curves are at their lowest points. B. the short-run average cost curve is at its lowest point. C. the long-run average cost curve is at its lowest point. D. None of these is necessarily true.