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Question 4
- Explain
Microeconomic electricity theory?.
- Differentiate between
monopoly and
- With a diagram, explain the game between consumers and producers in the electricity
Step by step
Solved in 2 steps
- Question 10 of 20 The accompanying graph depicts a hypothetical monopoly. Follow instuctions 1-3 below to identify the monopoly's profits. 1. Place point E at the monopoly's profit maximizing price and quantity. 2. Move the average total cost (ATC) curve to a position that depicts the monopoly earning a positive profit. 3. Place the area labeled Profit in the area of the graph that represents the monopoly's profit. 10 E MC Profit 9 8 АТС 7 5 4 3 2 1 MR D 1 2 4 7 8 9. 10 Quantity (millions of units) Price ($ per unit)1. Draw a graph of a typical natural monopoly with declining costs. a. Label monopoly price and quantity. Identify the area of deadweight loss when the monopoly chooses the profit-maximizing level of output. b. Label marginal cost price and quantity. i. How will the area of deadweight loss be impacted with marginal cost pricing? ii. What are the drawbacks to this approach? c. Label fair return price and quantity. What are the pros and cons of fair return pricing? d. What is incentive regulation? What are the positive and negative impacts of this strategy?5. The graph attached represents a monopoly firm. Answer the questions below. a. Briefly explain three ways in which pricing can be set with a regulated monopoly and the intended objective of each pricing method.b. Based on the diagram, if this monopoly firm is unregulated, what will be its profit? Show your calculations.c. Based on the diagram, if this firm is regulated based on social interest theory, what will be its profit? Show and explain your calculations.d. Based on the diagram, if this monopoly is subject to rate of return regulation, what will be the new price, output and profit of the firm? Show your calculations with explanations.e. Based on the diagram, if this is a natural monopoly that is allowed to set its price, what will be the minimum it should set in order to make a profit or break even? Explain your answer.
- 1. Do you believe that Netflix will become or is already a monopoly? What are some of the monopoly traits that would make you believe it will soon be or is already a monopoly? 2. In a competitive business environment, firms are said to be break-even in the long run. What does this exactly mean, why does it happen? Does this long-run break-even outcome apply to all market structures, and why?i A monopoly can be identified by a few traits that distinguish it from other market systems. Identify the reasons a monopoly firm sets prices in microeconomics. ii. Monopolistic opponents said that the monopoly power would have a negative social impact. Tell us why. iii Describe THREE (3) qualities or conditions of the perfectly Competitive market structure. A perfectly competitive market has the opposite characteristics or conditions from a monopolistic market.2. How monopoly generates profit? Explain with the help of equation and graphs?
- 1. Which of the following is not possible for a monopolist in the short-run? a. An economic profit b. Breaking even c. An above normal rate of return d. An economic loss e. All of the above are possible for a monopolist in the short-run 2. Which of the following is least like monopoly? a. Sony Corporation b. A natural gas utility company c. A cable tv company d. An electric utility company 3. Which of the following is most like a monopoly? a. Parker Brothers (a game company) b. The U.S. Postal Service c. Intel (a chip manufacturer) d. Motorola (an electronics firm) e. Kroger (a grocery store chain) 4. A monopolist can earn above-normal profit in the long-run. a. True b. False 5. If a monopolist cannot make an above-normal profit, entry by other firms will occur. a. True b. FalseⒸ Macmillan Learning The accompanying graph depicts a hypothetical monopoly. Follow instuctions 1-3 below to identify the monopoly's profits. 1. Place point E at the monopoly's profit maximizing price and quantity. 2. Move the average total cost (ATC) curve to a position that depicts the monopoly earning a positive profit. 3. Place the area labeled Profit in the area of the graph that represents the monopoly's profit. Price ($ per unit) 10 9 8 7 5 3 2 1 0 0 1 O X E MR 2 3 4 5 6 Quantity (millions of units) 7 MC 00 D 9 ATC 10 ProfitO Macmillan Learning The accompanying graph depicts a hypothetical monopoly. Follow instuctions 1-3 below to identify the monopoly's profits. 1. Place point E at the monopoly's profit maximizing price and quantity. 2. Move the average total cost (ATC) curve to a position that depicts the monopoly earning a positive profit. 3. Place the area labeled Profit in the area of the graph that represents the monopoly's profit. Price ($ per unit) 10 9 8 7 6 5 3 2 1 0 0 1 E K MR 2 3 4 5 6 Quantity (millions of units) 7 MC 8 D ATC 9 10 Profit
- 2 A monopoly sells its goods in the United States, where the elasticity of demand is -2, and in Japan, where the elasticity of demand is -5. Its marginal cost is $10. At what price does the monopoly sell its goods in each country if resale is impossible?Also explain why a monopoly firm, choose not to produce at its full capacity? How does monopoly affect society’s well-being? What is price discrimination and how it helps the firm and the consumersC. Explain how the following cause market failure:(i) under provision of merit goods(ii) monopoly. Diagrams should be included in your explanations.
