The diagram below shows the demand and the cost curves of a natural monopoly, Co
ID: 1200808 • Letter: T
Question
The diagram below shows the demand and the cost curves of a natural monopoly, Compared with the unregulated price, if the government set a maximum price at P2, the deadweight loss would be _________ and the monopolist would ___________.
a.
d.Zero; break even
Foxon has a monopoly in the production of a specialized chip. At its current output of 500 units the price is $200, and average total cost is $150. In addition, both marginal cost and marginal revenue equal $120. Which of the following statements is correct?
The firm is earning an economic profit of $25,000.
A pharmaceutical firm Astra is the sole producer and seller of a special drug under patent protection and behaves like a monopoly. When the patent expires, and the market for the drug becomes competitive with the entry of other firms that produce the same drug, then
d.the price will fall but the quantity sold will also decrease.
Christy's Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy's marginal revenue from the 30th haircut?
Smaller; earn a smaller economic profitExplanation / Answer
The diagram below shows the demand and the cost curves of a natural monopoly, Compared with the unregulated price, if the government set a maximum price at P2, the deadweight loss would be _________ and the monopolist would ___________.
Answer:
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Foxon has a monopoly in the production of a specialized chip. At its current output of 500 units the price is $200, and average total cost is $150. In addition, both marginal cost and marginal revenue equal $120. Which of the following statements is correct?
d. The firm is earning an economic profit of $25,000.
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A pharmaceutical firm Astra is the sole producer and seller of a special drug under patent protection and behaves like a monopoly. When the patent expires, and the market for the drug becomes competitive with the entry of other firms that produce the same drug, then
b.the price of the drug will fall, the quantity sold will increase but the total surplus (consumer surplus plus producer surplus) will decrease
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Christy's Haircuts, the sole supplier of haircuts in a small town, faces the demand schedule shown in the table above. What is Christy's marginal revenue from the 30th haircut?
Answer: d- $50.00
c. Smaller; break evenRelated Questions
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