PRICE (Dollars per gyro) Now assume that one or the gyro vendors successfully petitions the neignbornood development board to obtain exclusive rights to sell gyros in the neighborhood. This firm buys up all the rest of the gyro food trucks in the area and begins to operate as a monopoly. Assume that this change does not affect demand and that the marginal cost curve of the new monopoly corresponds exactly to the supply curve from the previous graph. The following graph reflects this new set of assumptions, and shows the demand (D), marginal revenue (MR), and marginal cost (MC) curves for the monopoly vendor. Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and quantity of a monopolist. 5.0 4.5 4.0 3.5 55 3.0 Monopoly 2.5 MC 2.0 1.5 1.0 0.5 MR D 045 Monopoly Outcome Deadweight Loss ? Cancer Cre 0.5 D MR 0 0 35 70 105 140 175 210 245 280 315 350 QUANTITY (Gyros) Consider the welfare effects that result from the industry operating as a competitive market versus a monopoly. On the monopoly graph, use the black points (plus symbol) to shade the area that represents the loss of welfare, or deadweight loss, caused by a monopoly. That is, show the area that was formerly part of total surplus and now does not accrue to anybody. Deadweight loss occurs when a market is controlled by a monopoly because the resulting equilibrium is different from the (efficient) competitive outcome. In the following table, enter the price and quantity that would arise in a competitive market; then enter the profit-maximizing price and quantity that would be chosen if a monopolist controlled this market. Price Market Structure (Dollars) Quantity (Gyros) Competitive Monopoly Given the summary table of the two different market structures, you can infer that, in general, the price is higher under a and the quantity is lower under a Origin rigins part or té CA Network Cancer Create
PRICE (Dollars per gyro) Now assume that one or the gyro vendors successfully petitions the neignbornood development board to obtain exclusive rights to sell gyros in the neighborhood. This firm buys up all the rest of the gyro food trucks in the area and begins to operate as a monopoly. Assume that this change does not affect demand and that the marginal cost curve of the new monopoly corresponds exactly to the supply curve from the previous graph. The following graph reflects this new set of assumptions, and shows the demand (D), marginal revenue (MR), and marginal cost (MC) curves for the monopoly vendor. Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and quantity of a monopolist. 5.0 4.5 4.0 3.5 55 3.0 Monopoly 2.5 MC 2.0 1.5 1.0 0.5 MR D 045 Monopoly Outcome Deadweight Loss ? Cancer Cre 0.5 D MR 0 0 35 70 105 140 175 210 245 280 315 350 QUANTITY (Gyros) Consider the welfare effects that result from the industry operating as a competitive market versus a monopoly. On the monopoly graph, use the black points (plus symbol) to shade the area that represents the loss of welfare, or deadweight loss, caused by a monopoly. That is, show the area that was formerly part of total surplus and now does not accrue to anybody. Deadweight loss occurs when a market is controlled by a monopoly because the resulting equilibrium is different from the (efficient) competitive outcome. In the following table, enter the price and quantity that would arise in a competitive market; then enter the profit-maximizing price and quantity that would be chosen if a monopolist controlled this market. Price Market Structure (Dollars) Quantity (Gyros) Competitive Monopoly Given the summary table of the two different market structures, you can infer that, in general, the price is higher under a and the quantity is lower under a Origin rigins part or té CA Network Cancer Create
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:PRICE (Dollars per gyro)
Now assume that one or the gyro vendors successfully petitions the neignbornood development board to obtain exclusive rights to sell gyros in the
neighborhood. This firm buys up all the rest of the gyro food trucks in the area and begins to operate as a monopoly. Assume that this change does
not affect demand and that the marginal cost curve of the new monopoly corresponds exactly to the supply curve from the previous graph. The
following graph reflects this new set of assumptions, and shows the demand (D), marginal revenue (MR), and marginal cost (MC) curves for the
monopoly vendor.
Place the black point (plus symbol) on the following graph to indicate the profit-maximizing price and quantity of a monopolist.
5.0
4.5
4.0
3.5
55
3.0
Monopoly
2.5
MC
2.0
1.5
1.0
0.5
MR
D
045
Monopoly Outcome
Deadweight Loss
?
Cancer
Cre
Transcribed Image Text:0.5
D
MR
0
0
35
70 105
140
175 210 245
280
315 350
QUANTITY (Gyros)
Consider the welfare effects that result from the industry operating as a competitive market versus a monopoly.
On the monopoly graph, use the black points (plus symbol) to shade the area that represents the loss of welfare, or deadweight loss, caused by a
monopoly. That is, show the area that was formerly part of total surplus and now does not accrue to anybody.
Deadweight loss occurs when a market is controlled by a monopoly because the resulting equilibrium is different from the (efficient) competitive
outcome.
In the following table, enter the price and quantity that would arise in a competitive market; then enter the profit-maximizing price and quantity that
would be chosen if a monopolist controlled this market.
Price
Market Structure
(Dollars)
Quantity
(Gyros)
Competitive
Monopoly
Given the summary table of the two different market structures, you can infer that, in general, the price is higher under a
and the quantity is lower under a
Origin
rigins part or té CA Network
Cancer
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