pmap2 - This policy would yield a __________ (profit, loss,...

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Additional Problem 2 : Pure Monopoly The following diagram illustrates the cost curves and demand information for a pure monopoly. Answer the questions below this figure. a) The monopolist is in __________ (short run, long run) equilibrium. At equilibrium the monopolist received a __________ (profit, loss, break even) of $__________. b) If the monopolist acted in a purely competitive way in the long-run the equilibrium price would be $__________ and quantity of output would be __________. The pure competitor would receive a __________ (profit, loss, break even) given the same cost and demand information. c) If government decides to regulate this firm (which again we will view as a monopolist) in the long-run in order to maximize the allocation of resources to society, the regulated price would be $__________ and quantity produced would be __________.
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Unformatted text preview: This policy would yield a __________ (profit, loss, break even) to the monopolist of $__________. d) Given the result in (d) above, the government might decide instead to use a fair-return pricing strategy. Under this scheme, the price would be set at $__________ and quantity produced would be __________. This policy provides the monopolist with a __________ (profit, loss, break even) outcome. e) Should the government choose to subsidize the monopolist in order to provide the public with maximum output of the firm, the subsidy would be __________. The price under this scenario will be $__________ and quantity produced will be __________. 0 z D MR Price and costs (dollars) MC ATC z z z 36 34 27 25 20 10 21 25 Quantity...
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This note was uploaded on 10/26/2009 for the course ECON 180-004-20 taught by Professor Bresnock during the Fall '09 term at UCLA.

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