Use the graph to the right for a monopoly to answer the questions What quantity

Question

Use the graph to the right for a monopoly to answer the questions What quantity will the monopoly produoe, and what price will the monopoly charge? The monopoly will produceunits and charge$per unit. (Enter numeric responsos using roal 4.00 numbers rounded to two decimal places) Suppose the monopoly produce, and what price will the monopoly charge? ATC can charge less than $2.80 but can't charge more). Now what quantity will the Will every consumer who is willing to pay this price be able to buy the product? Explain briefly MR 040 O A there will be a surplus because consumers will demand more than the monopoly will supply O B. the quantity supplied by the O C. there will be a shortage because consumers will demand more than the monopoly will supply O D. there will be a shortage because OE. there will be a surplus because consumers will demand less than the monopoly will upply 0 16 32 48 80 72 96 108 120 132 144 156 will demand less than the monopoly will supply 4 5 6 7

Explanation / Answer

a) The monopoly will produce at a point where the MR curve meets the MC curve. The quantity will be 84 and the price will be $3.60.

b) The new price will be $2.80 and the quantity produced will be 132.

c) With the price ceiling, there will be no surplus or shortage but the quantity demanded will be equal to quantity supplied in the economy. The answer is "B".

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