Principles of Economics- Mankiw (5th) 335

Principles of Economics- Mankiw (5th) 335 - CHAPTER 15 M O...

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CHAPTER 15 MONOPOLY 345 e. If the author were paid $3 million instead of $2 million to write the book, how would this affect the publisher’s decision regarding the price to charge? Explain. f. Suppose the publisher were not profit-maximizing but were concerned with maximizing economic efficiency. What price would it charge for the book? How much profit would it make at this price? 2. Suppose that a natural monopolist were required by law to charge average total cost. On a diagram, label the price charged and the deadweight loss to society relative to marginal-cost pricing. 3. Consider the delivery of mail. In general, what is the shape of the average-total-cost curve? How might the shape differ between isolated rural areas and densely populated urban areas? How might the shape have changed over time? Explain. 4. Suppose the Clean Springs Water Company has a monopoly on bottled water sales in California. If the price of tap water increases, what is the change in Clean
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