Profit maximizing behavior of natural monopoly

Assignment Help Macroeconomics
Reference no: EM1311212

Natural Monopoly: The following table depicts the cost and demand structure a natural monopoly faces.

Output 

Price

Total Costs

0

$100

$0

1

$95

$92

2

$90

$177

3

$85

$255

4

$80

$331

5

$75

$406

6

$70

$480

(a) Calculate total revenue, marginal revenue, marginal cost, and average total cost of this natural monopoly. 

(b) What is the profit maximizing output and price for this natural monopoly if the government does not regulate it?

(c) Assuming total costs include all implicit costs (including a fair rate of return for shareholders),   what price and output will the government set for the natural monopoly.

(d) Describe the characteristics of a natural monopoly and how a natural monopoly differs from other monopolies? (Hint: Compare the numerical patterns in the tables above and your calculations in 3(a) and 4(a))

Reference no: EM1311212

Questions Cloud

Average cost per diner for serving : Convert the total costs you computed to costs per diner. Average cost per diner for serving each of the following parties A party of four diners who three drinks in total.
Distribution of data : Part 1. What is the appropriate distribution for such data? Part 2. Is this lot anomalous?
Decision on whether a project is accepted or rejected : Decision on whether a project is accepted or rejected using NPV and IRR and What is the internal rate of return
Find the total cost of serving : The activity-based costing system and find the total cost of serving each of the following parties of diners? a. A party of four diners who three drinks in total.
Profit maximizing behavior of natural monopoly : Compute total revenue, marginal revenue, marginal cost, and average total cost of this natural monopoly. What is the profit maximizing output and price for this natural monopoly when the government does not regulate it?
Designing a linear programming problem : Design a Linear programming problem for the flair Furniture Company and find the combination of tables and chairs that the company must produce to maximize profits.
Low-volume product under activity-based costing : Describe why overhead cost shifted from the high-volume product to the low-volume product under activity-based costing.
Determining optimal solution : If a technical breakthrough occurred that raised the profit per unit of X 1  to $3, would this affect the optimal solution?
Find the unit product cost of each product : Assume that the company decides to use activity-based costing to apply overhead cost to products. Find the unit product cost of each product.

Reviews

Write a Review

 

Macroeconomics Questions & Answers

  Effect of recession on the investment curve

Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.

  Discussion-non price competition

Explain how advertising can be employed to allow Tots-R-Us to keep price average above cost without encouraging entry.

  Long-run labor demand and factor substitutability

Questions on Long-Run Labor Demand and Factor Substitutability, Own-price elasticity, Cross-price elasticity

  Deadweight loss for the monopolist firm

What is the profit-maximizing price-output combination and what are the levels of the profits and consumer surplus at that point? What is Dead-weight-loss?

  Pricing decision on the basis of elasticity of demand

A tariff I ssimply a tax on imports. Use our model of the excise tax (with  diagram) to expain why domistic firms request that tariff? Consider both the domestic and the foreign country in your answer

  In using the taylor rule

In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?

  What will be the effect of change in policy

What will be the effect of this change in policy on both the real and the nominal interest rate in the long - run?

  Behavior of average product and marginal product

Describe the law of diminishing returns. Then discuss why you agree or disagree with following statements.

  Contractionary and expansionary monetary policy

What is the difference between contractionary and expansionary monetary policy?

  Calculate the variance and standard deviation

Compute the expected value (revenue) from each project. Compute the coefficient of variation of each project, and find out which project should the company choose. Compute the variance and standard deviation of expected value from each project.

  Crises in the banking sector and bank run

Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?

   Problem on standard deviation

Problem on standard deviation

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd