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##### FIU ECO2023 Assignment HW08 Chapter 14 spring 14

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Question;1.;award:3.84 out of;3.84 points;Question and Exercise 14-2;Does a monopolist take market price as given? Why or why not?;Worksheet;Learning Objective: 14-01 Summarize how and why the decisions facing a;monopolist differ from the collective decisions of competing firms.;288;Question and Exercise 14-2;Section: The Key Difference between a Monopolist and a Perfect;Competitor;2.;award:3.84 out of;3.84 points;Question and Exercise 14-7;a. Demonstrate;graphically the profit-maximizing positions for a perfect competitor and a;monopolist.Instructions: On the following;graph, use the tool 'Mono' to identify the profit-maximizing output and price;for a monopolistic firm. Then use the tool 'PC' to identify the;profit-maximizing output and price for a perfect competitor.;b. How do they differ?;The competitive price is the;monopolistic price and the competitive output is the monopolistic output.;Graphing;Learning Objective: 14-02 Determine a monopolists price, output, and;profit graphically and numerically.;289;Question and Exercise 14-7;Section: A Model of Monopoly;3.;award:0 out of;3.84 points;Question and Exercise 14-8;True or false? Monopolists differ from perfect competitors because;monopolists make a profit. Why?;Worksheet;Learning Objective: 14-02 Determine a monopolists price, output, and;profit graphically and numerically.;289;Question and Exercise 14-8;Section: A Model of Monopoly;4.;award:3.19 out of;3.84 points;Question and Exercise 14-9;A monopolist with a;straight-line demand curve finds that it can sell two units at \$12 each or 12;units at \$2 each. Its marginal cost is constant at \$3 per unit.;a. Given the demand curve, draw the MR, and MC curves for;this monopolist.Instructions: Use the tool;MR' to draw the marginal revenue curve between the y-axis;(price) intersection and the x-axis (quantity) intersection (2;points). Finally, use the tool 'MC' to draw the marginal cost curve between Q =;0 and Q = 15 (2 points).;b. At what output level would the monopolist produce?Instructions: On the graph;above, use the tool 'Mono' to identify the profit-maximizing output and price;for a monopolistic firm.;c. At what output level would a perfectly competitive firm produce?Instructions: On the graph;above, use the tool 'PC' to identify the profit-maximizing output and price for;a perfectly competitive firm.;Graphing;Learning Objective: 14-02 Determine a monopolists price, output, and;profit graphically and numerically.;289;Question and Exercise 14-9;Section: A Model of Monopoly;5.;award:3.84 out of;3.84 points;Question and Exercise 14-9 (algo);A monopolist with a straight-line demand curve finds that it can sell;one unit at \$9 each or nine units at \$1 each. Its marginal cost is constant at;\$2 per unit.Part a not included in this question.Instructions: Enter your;answers as whole numbers.;b. A monopolist would produce unit(s) and;charge \$.;c. A perfect competitor would produce8 unit(s) and;charge \$;Worksheet;Learning Objective: 14-02 Determine a monopolists price, output, and;profit graphically and numerically.;289;Question and Exercise 14-9 (algo);Section: A Model of Monopoly;6.;award:3.84 out of;3.84 points;Question and Exercise 14-10;Demonstrate the;welfare loss created by a monopoly.Instructions: Use the tool;DWL' to identify the welfare loss created by a monopoly.;Graphing;Learning Objective: 14-03 Show graphically the welfare loss from;monopoly.;295;Question and Exercise 14-10;Section: Welfare Loss from Monopoly;7.;award:3.84 out of;3.84 points;Question and Exercise 14-11;Will the welfare loss from a monopolist with a perfectly elastic;marginal cost curve be greater or less than the welfare loss from a monopolist;with an upward-sloping marginal cost curve?;Worksheet;Learning Objective: 14-03 Show graphically the welfare loss from;monopoly.;295;Question and Exercise 14-11;Section: Welfare Loss from Monopoly;8.;award:3.84 out of;3.84 points;Question and Exercise 14-12;What three things;must a firm be able to do to price-discriminate?Instructions:You may select more;than one answer. Click the box with a check mark for correct answers and click;to empty the box for the wrong answers.;rev: 07_27_2013_QC_33121;9.;award:3.84 out of;3.84 points;Question and Exercise 14-15;During the 2001 anthrax scare, the U.S. government threatened to;disregard Bayer?s patent of ciprofloxacin, the most effective drug to fight;anthrax, and license the production of the drug to American drug companies to;stockpile the drug in case of an anthrax epidemic. While the policy would lower;costs to the U.S. government of stockpiling the drug, it also would have other;costs. What are those costs?Instructions: You may select;more than one answer. Click the box with a check mark for correct answers and;click to empty the box for the wrong answers.;Higher current welfare loss.;Fewer new drugs will be invented.;Increased sunk costs by the drug industry.;Lost profit by Bayer.;rev: 07_27_2013_QC_33121;10.;award:3.84 out of;3.84 points;Question and Exercise 14-16;Econocompany is under;investigation by the U.S. Department of Justice for violating antitrust laws.;The government decides that Econocompany has a natural monopoly and that, if it;is to keep the government?s business, it must sell at a price equal to marginal;cost. Econocompany says that it can?t do that and hires you to explain to the;government why it can?t.;a. You do so in reference to the following graph.;b. What price would it charge if it were unregulated?;c. What price would you advise that it should be allowed to char;11.;award:3.84 out of;3.84 points;Question and Exercise 14-17;What are the ways in which a firm can differentiate its product from;that of its competitors? What is the overriding objective of product;differentiation?;Worksheet;Learning Objective: 14-05 Explain how monopolistic competition differs;from monopoly and perfect competition.;302;Question and Exercise 14-17;Section: Monopolistic Competition;12.;award:3.84 out of;3.84 points;Question and Exercise 14-20;If a monopolistic competitor is able to restrict output, why doesn?t it;earn economic profits?;Worksheet;Learning Objective: 14-05 Explain how monopolistic competition differs;from monopoly and perfect competition.;302;Question and Exercise 14-20;Section: Monopolistic Competition;13.;award:3.36 out of;3.84 points;Question and Exercise 14-21;You?re the manager of;a firm that has constant marginal cost of \$6. Fixed cost is zero. The market;structure is monopolistically competitive. You?re faced with the demand curve;in the following graph;a. Determine graphically the profit-maximizing price and output for your firm;in the short run. Demonstrate what profit or loss you?ll be making.Instructions: Use the tool;MR' to draw the marginal revenue curve (plot only the endpoints such that the;first point touches the vertical axis and the last point touches the horizontal;axis). Then use the tool 'MC' to draw the marginal cost curve between Q =;0 and Q = 700. Finally, use the tool 'P/L' to identify the;profit or loss this firm is earning in the short run.;b. What happens in the long run?;In the long run,, causing this firm's;demand curve to. This firm will earn in the long;run.;Graphing;Learning Objective: 14-05 Explain how monopolistic competition differs;from monopoly and perfect competition.;302;Question and Exercise 14-21;Section: Monopolistic Competition;14.;award:3.84 out of;3.84 points;MC Qu. 209 If P = 3Qs + 3 represents market supply for a comp...;If P = 3Qs + 3 represents market;supply for a competitive industry and market demand is given by Qd =;31 - 1/3 P, the equilibrium quantity is;10.;15.;20.;48.;Equilibrium in a competitive market occurs at the point at which supply;equals demand. Substituting for P in the market demand and;equating Qd and Qs yields Q =;31 - (1/3) (3Q + 3). Solving for Q yields Q =;15.;Multiple Choice;Difficulty: 3 Hard;Section: Algebra of Monopoly and Competition;MC Qu. 209 If P = 3Qs + 3 represents market supply for a comp...;Learning Objective: 14-A;15.;award:3.84 out of;3.84 points;MC Qu. 210 If P = 3Qs + 3 represents market supply for a comp...;If P = 3Qs + 3 represents market;supply for a competitive industry and market demand is given by Qd =;31 - 1/3 P, the equilibrium price is;\$10.;\$15.;\$20.;\$48.;Equilibrium in a competitive market occurs at the point at which supply;equals demand. Substituting Q from the demand equation into;the market supply curve equation yieldsP = 3 (31 - 1/3P) +;3. Solving for P yields P = \$48.;Multiple Choice;Difficulty: 3 Hard;Section: Algebra of Monopoly and Competition;MC Qu. 210 If P = 3Qs + 3 represents market supply for a comp...;Learning Objective: 14-A;16.;award:3.84 out of;3.84 points;MC Qu. 211 Suppose the market demand curve for a monopolist i...;Suppose the market demand curve for a monopolist is given by P =;50 - 10Q. Then the marginal revenue curve is given by;MR = 25 - 10Q.;MR = 25 - 20Q.;MR = 50 - 5Q.;MR = 50 - 20Q;The marginal revenue curve has the same y-intercept as the;market demand curve but twice the slope.;Multiple Choice;Difficulty: 3 Hard;Section: Algebra of Monopoly and Competition;MC Qu. 211 Suppose the market demand curve for a monopolist i...;Learning Objective: 14-A;16.;award:3.84 out of;3.84 points;MC Qu. 211 Suppose the market demand curve for a monopolist i...;Suppose the market demand curve for a monopolist is given by P =;50 - 10Q. Then the marginal revenue curve is given by;MR = 25 - 10Q.;MR = 25 - 20Q.;MR = 50 - 5Q.;MR = 50 - 20Q;The marginal revenue curve has the same y-intercept as the;market demand curve but twice the slope.;Multiple Choice;Difficulty: 3 Hard;Section: Algebra of Monopoly and Competition;MC Qu. 211 Suppose the market demand curve for a monopolist i...;Learning Objective: 14-A;16.;award:3.84 out of;3.84 points;MC Qu. 211 Suppose the market demand curve for a monopolist i...;Suppose the market demand curve for a monopolist is given by P =;50 - 10Q. Then the marginal revenue curve is given by;MR = 25 - 10Q.;MR = 25 - 20Q.;MR = 50 - 5Q.;MR = 50 - 20Q;The marginal revenue curve has the same y-intercept as the;market demand curve but twice the slope.;Multiple Choice;Difficulty: 3 Hard;Section: Algebra of Monopoly and Competition;MC Qu. 211 Suppose the market demand curve for a monopolist i...;Learning Objective: 14-A;16.;award:3.84 out of;3.84 points;MC Qu. 211 Suppose the market demand curve for a monopolist i...;Suppose the market demand curve for a monopolist is given by P =;50 - 10Q. Then the marginal revenue curve is given by;MR = 25 - 10Q.;MR = 25 - 20Q.;MR = 50 - 5Q.;MR = 50 - 20Q;The marginal revenue curve has the same y-intercept as the;market demand curve but twice the slope.;Multiple Choice;Difficulty: 3 Hard;Section: Algebra of Monopoly and Competition;MC Qu. 211 Suppose the market demand curve for a monopolist i...;Learning Objective: 14-A;20.;award:3.84 out of;3.84 points;MC Qu. 215 If P = Q/15 represents market supply for a competi...;If P = Q/15 represents market supply for a;competitive industry and market demand is given by Qd =;500 - 10P, the equilibrium price is;\$12.50.;\$20.00.;\$31.25.;\$50.00.;Equilibrium in a competitive market occurs at the point at which supply;equals demand. Rewriting the supply equation as Q = 15P and;equating Qd with Qs yields;equilibrium price of \$20 and quantity of 300.;Multiple Choice;Difficulty: 3 Hard;Section: Algebra of Monopoly and Competition;MC Qu. 215 If P = Q/15 represents market supply for a competi...;Learning Objective: 14-A;21.;award:3.84 out of;3.84 points;MC Qu. 216 If MC = Q/15 represents marginal cost for a monopo...;If MC = Q/15 represents marginal cost for a monopolist and;market demand is given by Qd = 500 - 10P;the equation for marginal revenue is;MR = 50Q - (1/5)Q2.;MR = 50Q - (1/10)Q2.;MR = 50 - (1/5)Q.;MR = 50 - (1/10)Q.;Total revenue (P ? Q) is 50Q -;(1/10)Q2. The first derivative of total revenue with respect;to Q is the MR equation.;Multiple Choice;Difficulty: 3 Hard;Section: Algebra of Monopoly and Competition;MC Qu. 216 If MC = Q/15 represents marginal cost for a monopo...;Learning Objective: 14-A;22.;award:3.84 out of;3.84 points;MC Qu. 217 If MC = Q/15 represents marginal cost for a monopo...;If MC = Q/15 represents marginal cost for a monopolist and;market demand is given by Qd = 500 - 10P;the monopolist maximizes profit by producing;187.5 units of output.;250 units of output.;300 units of output.;500 units of output.;The monopolist sets MC = MR, so set Q/15 = 50 - (1/5)Q and;solve for Q.;Multiple Choice;Difficulty: 3 Hard;Section: Algebra of Monopoly and Competition;MC Qu. 217 If MC = Q/15 represents marginal cost for a monopo...;Learning Objective: 14-A;23.;award:3.84 out of;3.84 points;MC Qu. 218 If MC = Q/15 represents marginal cost for a monopo...;If MC = Q/15 represents marginal cost for a monopolist and;market demand is given by Qd = 500 - 10P;the monopolist maximizes profit by setting price equal to;\$12.50.;\$20.00.;\$31.25.;\$50.00.;Substitute Q = 187.5 into the market demand equation;(187.5 = 500 - 10P) and solve for price.;Multiple Choice;Difficulty: 3 Hard;Section: Algebra of Monopoly and Competition;MC Qu. 218 If MC = Q/15 represents marginal cost for a monopo...;Learning Objective: 14-A;24.;award:3.84 out of;3.84 points;MC Qu. 219 If P = Q/15 represents marginal cost for a monopol...;If P = Q/15 represents marginal cost for a;monopolist and market supply for a competitive industry and market demand is;given by Qd = 500 - 10P, the difference;between the monopoly equilibrium and the competitive equilibrium is that a;monopolist would produce;187.5 units of output at a price of \$31.25 each, whereas competitive;output would be 300 units at a price of \$20.;300 units of output at a price of \$20, whereas competitive output;would be 187.5 units at a price of \$31.25.;250 units of output at a price of \$25, whereas competitive output;would be 300 units at a price of \$20.;187.5 units of output at a price of \$31.25, whereas competitive output;would be 250 units at a price of \$25.;To find the monopoly output, set MC = MR. To find the monopoly price;substitute the monopoly Q into the market demand equation. To;find competitive output, rewrite the market supply equation as Qs =;15P and set Qs = Qd;then substitute this price into either the Qs equation;or the Qd equation.;Multiple Choice;Difficulty: 3 Hard;Section: Algebra of Monopoly and Competition;MC Qu. 219 If P = Q/15 represents marginal cost for a monopol...;25.;award:3.84 out of;3.84 points;MC Qu. 222 Refer to the graph shown. The equation...;Refer to the graph shown. The equation for this market demand curve is;Qd = 1,000 - 20P.;Qd = 1,000 - 50P.;Qd = 20 - 1,000P.;Qd = 50 - 1,000P.;Using the equation for a straight line, y = ax + b;where y is price and x is quantity, the;equation is P = 20 - (1/50)Q. Rewrite the equation by;solving for Q.;Multiple Choice;Difficulty: 3 Hard;Section: Algebra of Monopoly and Competition;MC Qu. 222 Refer to the graph shown. The equation...;Learning Objective: 14-A;26.;award:4 out of;4.00 points;MC Qu. 223 Refer to the graph shown. The welfare...;Refer to the graph shown. The welfare loss of monopoly is;1,137.5.;1,381.25.;2,112.5.;2,762.5.;Monopoly causes consumer surplus to fall by [13.5 - 7] ? 425 ? ?.;Multiple Choice;Difficulty: 3 Hard;Section: Algebra of Monopoly and Competition;MC Qu. 223 Refer to the graph shown. The welfare...;Learning Objective: 14-A

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