3. Consider a monopoly with a constant marginal cost of 2 facing a linear demand of 20-2Q. Compared to a perfectly competitive market, what is the impact of the monopoly on consumer surplus and what is the deadweight loss brought about by the monopoly? Detail your answer. Do not even think of using chatGPT.

3. Consider a monopoly with a constant marginal cost of 2 facing a linear demand of 20-2Q. Compared to a perfectly competitive market, what is the impact of the monopoly on consumer surplus and what is the deadweight loss brought about by the monopoly? Detail your answer. Do not even think of using chatGPT.

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter11: Monopoly And Antitrust Policy

Section: Chapter Questions

Problem 31CTQ: In the middle of the twentieth century, major U.S. cities had multiple competing city bus companies....

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Similar questions

Imagine that you ale managing a small firm and thinking about entering the market of a monopolist. The monopolist is currently charging a high price, and you have calculated that you can make a nice profit charging 10 less than the monopolist. Before you go ahead and challenge the monopolist, what possibility should you consider for how the monopolist might react?
What is a natural monopoly?
From the graph you drew to answer Exercise 11.6, would you say this transit system is a natural monopoly? Justify. Use the following information to answer the next three questions. In the years before wireless phones, when telephone technology requited having a wile matting to every home, it seemed plausible that telephone service had diminishing average costs and might require regulation like a natural monopoly. For most of the twentieth century, the national U.S. phone company was AT&T, and the company functioned as a regulated monopoly. Think about the deregulation of the U.S. telecommunications industry that has occurred over the last few decades. (This is not a research assignment, but a thought assignment based on what you have learned in this chapter.)
Draw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the monopolists profit-maximizing output level. Now, think about a slightly higher level of output (sayQ0+1). According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?
How can a monopolist identify the profit-maximizing level of output if it knows its total revenue and total cost curves?
How does the quantity produced and price charged by a monopolist compare to that of a perfectly competitive film?
What is a legal monopoly?
Suppose demand for a monopolys product falls 50 that its profit-maximizing price is below average variable cost. How much output should the film supply? Hint: Draw the graph.
Is a monopolistically competitive firm productively efficient? Is it allocatively efficient? Why or why not?
If public utilities are a natural monopoly, what would be the danger in deregulating them?
Why are urban areas willing to subsidize urban transit systems? Does the argument for subsidies make sense to you?
In the middle of the twentieth century, major U.S. cities had multiple competing city bus companies. Today, there is usually only one and it runs as a subsidized, regulated monopoly. What do you suppose caused the change?