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Questions tagged [monopoly]

A market structure in which there is a single firm acting as supplier.

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How do I find the optimal uniform price for a monopoly?

A monopolist is selling its products in the UK and the EU. The demand for the monopolist's product is Q(UK) = 42 - P and Q(EU) = 16-4P. The cost function of the monopolist is C(Q) = Q^2 where Q = Q(UK)...
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how does monopolisitic competition make profit in the long run in reality

guys, I have this doubt that if the fast food industry such as KFC, and Maccas are examples of monopolistic competition how are they still making a profit? Because as per the model in long run the ...
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Profit maximization in a monopoly [closed]

Suppose two goods $1$ and $2$ are produced by a monopolist firm. The market demands are $$q_1(p_1, p_2) = a-p_1+bp_2 \tag{1}$$ $$q_2(p_1, p_2) = a-p_2+bp_1 \tag{2}$$ and the cost functions are $c_i(...
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Why does negative derivative of AC with respect to q imply Economies of scale (Monopoly)

In the following Industrial organization exercise form Church and Ware chapter 4 exercise 2 (preliminary info: C(q) = cost function; f = fixed costs; c = marginal costs; q= quantity of goods produced)...
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Schumpeterian Growth paradigm

I'm working on a Schumpeterian R&D growth model, and I assume that the quality gap between a new machine and the replaced one, i.e. $\lambda$ is sufficiently large such that I have drastic ...
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Does Russia export anything that isn't widely available elsewhere?

Some countries produce items for which there is no easy substitute. For example Taiwan produces 53% of the world's semiconductors. Is there any product(s)/service(s) for which Russia is a monopolist (...
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How can I compare surplus in monopolistic competition to surplus in monopoly?

Is there any way to compare the total surplus and consumer/producer surplus in monopolistic competition with that of perfect competition or monopoly? All I can come up with is the idea that deadweight ...
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Plot the dependence of the monopolist’s output (Q) on the price ceiling ($\overline{P}$)

Full task condition: A monopolistic firm’s costs are $TC=\begin{cases} 170+20q, \ q>0 \\ 0 \ q=0 \end{cases}$. There are two groups of consumers of equal size in the monopolist’s market: $Q_{d1} = ...
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Solving problem for optimal price (maximize profit) *attempt inside*

Let a demandfunction be defined as $D(p)=B-bp$, where $b,B>0$. A firm has some production cost, $c$, and can set the price $p$ under the constrain given by the Demand. What is the optimal price? ...
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How does a CLEC innovate?

A CLEC, competitive local exchange carrier, is described... A competitive local exchange carrier (CLEC), in the United States and Canada, is a telecommunications provider company (sometimes called a &...
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Lerner Index Interpretation?

How do you interpret the Lerner Index? I ask because at Uni. we have been told that, for monopoly, when the producer max. his profit, he sets the price such as the demand is elastic and the lerner ...
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Are monopolies always price makers?

I have the following True/False question: A single price-taking firm on the market is called a monopoly. As far as I know, a monopoly is a price maker not a price taker. That being said if it is a ...
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Profit Maximisation for a Monopolist

Suppose a monopolist faces the following inverse demand function : $p = exp(-Q)$ The monopolist can produce any positive level of output with zero variable cost. Its fixed cost is $F$. Find the ...
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Can the internet be characterized as a public utility?

The idea of what a public utility is, economically, rather than just legally is not a new point of discussion. Philosophers like John Stuart Mill argued for the public provision of water and gas, ...
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Will the market for driverless cars move toward a monopoly?

There is a short article in The Economist (link below) where the writer makes the claim that because there are firms the exhibit economies of scale - in driverless technology - they will eventually ...
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Monopoly marginal cost [closed]

I have recently been stumped on a microeconomics question where it gives a monopoly firm, its operating ATC (average total cost), price (average revenue), and quantity traded. First thing it wants me ...
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Is anti-competitive behavior a threat in a society with free trade and no regulation?

A question that I have is whether a truly economically free society needs to (or should) have laws against anti-competitive behavior. Take liquor distribution as an example. In the United States ...
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How to compute Social Welfare in this model?

The first part of this scientific article analyzes reward-based crowdfunding. The assumptions are: Seller is a monopolist Unit mass of consumers Unit demand Two periods Individuals are identified by $...
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Menu-pricing with three consumer groups

I want to analyze the following setting: An entrepreneur (with monopoly power) sells a product in two periods. In period 1 there are two consumer groups (denoted by 1 and 2) and in period 2 there is ...
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A high store loyalty indicates what kind of competition among cement retailers selling products of the same brand?

To provide some context, this question occurred to me while I was considering the cement retail market. If one considers retailers selling cement of only one brand, then the concept of brand loyalty ...
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What does liberal economic theory say about monopolies?

Ludwig von Mises in his book "Liberalism: In the Classical Tradition" writes that in liberal economic the monopolies are rare and have a tendency to disappear. For an onlooker like me, however, his ...
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Optimal production plan in monopol

Suppose a monopolist faces the following demand curve: $𝑃(𝑄) = 120 − 3𝑄$, where $𝑄 = 𝑞_1 + 𝑞_2$. The monopolist has two factories. Factory 1 and factory 2 have the following marginal costs: $$ 𝑀...
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Doesn't it make sense in terms of economic security for tech companies to support unions?

It seems to me looking across (modern) history that the biggest threat to monopoly is government intervention. It certainly seems true in present times when you have many politicians on the left ...
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Does marginal revenue actually refer to marginal revenue per time unit?

When I was learning about why marginal revenue is lower than demand, I referred to this derivation: $$\frac{d(TR)}{dQ} = \frac{d(PQ)}{dQ} = \frac{PdQ + QdP}{dQ} = P + Q\frac{dP}{dQ}$$ Wikipedia ...
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Shouldn't big tech want to split up?

This is a reference request. Where can I find an analysis that explains why companies like Microsoft and Amazon don't split into two. At a certain point diseconomies of scale would kick in. I would ...
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Have countries with a monopoly on a resource in an area ever established 1-company monopolies in that area to drive up price?

Say its the 18th century and South America wants tea. Britain, for example could have a monopoly on the tea trade in the area. However if multiple British companies sell in the area they will drive ...
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What is the definition of social welfare in monopoly?

I'm studying problem that requires me to calculate social welfare in a monopoly setting. But I dont know what social welfare is, and I can't find it in my book or by googling. What am I asked to ...
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Would you consider airport parking to be a monopoly or a monopolistic market?

If you look at it one way and group the different companies that offer parking, it could be a monopoly as that is the only place you can park. On the other hand, the different companies offer ...
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Monopoly's MC, AVC and TVC

I do not quite understand the statement "total variable cost is the area under the marginal cost curve" Does it means MC inserts at the AVC at the lowest point (see picture)? But why AVC is drawn and ...
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Doubt on Calculation of MR

So this is very beginner level doubt. I know $ MR = \frac{\partial TR}{\partial q} $ . So TR need to be in terms of q to differentiate. This helps us to find Optimal Output level in Monopoly by ...
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perfect price discrimination and allocative efficiency for a monopoly

Maybe I am just confusing myself, but what does charging a different price at every unit have to do with an output level being allocatively efficient? I understand what price discrimination is, I just ...
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What is max here, and how did they derive the first order condition from it?

Hello. Someone sent this on a discord server that I am on, and I couldn't make heads or tails of this. I found the book it is from on studocu; solutions to Cabral's Industrial Organisations, 2nd Ed. ...
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Duopoly Paradox

In these lectures, the professor shows that in a Cournot Duopoly, firms will supply a total market quantity of identical goods between that of a monopoly and that of a perfect competition, while in a ...
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Multiplant Monopoly With Third Degree Price Discrimination

I am trying to do an exercise with a Monopoly Firm with 2 production plants that supplies 3 different markets. I know how to do every case (Multiplant monopoly or third degree price discrimination), ...
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Why is economic profit for a monopoly per unit demand minus ATC?

I understand that the P-ATC gives the per unit economic profit Why is this the case? Why wouldn't we take price minus the marginal cost?
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Numerical Question on a subsidized monopoly

Suppose a government agency has a monopoly in the provision of internet connections. The marginal cost of providing internet connections is $ \frac12$, whereas the inverse demand function is given by: ...
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Should Company B enter the market in the following cases

Say Company A has a monopoly producing product E, at a constant marginal cost of $3$ USD. Say the ideal number of units produced is $1$ unit which produces a profit of $2$ USD (=$P_{A}$). Next, ...
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Taxing a monopoly

can someone explain me why in some books the Demand and marginal revenue moves and but in other books is the marginal cost that moves. Is this like taxing the demand vs taxing the supply? so the ...
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Monopoly - Where is the Markup formula derived from?

Problem: My lecturer wrote the marginal revenue formula before writing the markup formula, indicating some sort of similarity between the two. How it was written on the board: Market Power ...
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Simple equilibrium in monopoly question

Given an inverse demand function for hangars: $$P = 3 - \frac{Q}{16,000}$$ and constant marginal cost of $1$, what is the equilibrium price and quantity of hangars in a monopoly? In a perfectly ...
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High Fixed Cost and Zero VC

Suppose a Monopoly has a High Fixed Cost= 0.5 and VC=0 . The Profit Max O/t : Q=1 But the Profit = -0.13 (which is < 0) which means -0.13 > -0.5 Should the Firm Produce produce Q=1 or Q=0 ? ...
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A monopolist has decreasing average costs, setting the price equal to AC will lead to?

1)what will happen to the Output compared to the situation where MR=MC ? 2)what will happen to the Output compare to Competitive Output? Attempt at Soln. : 1) 2) so definitely quantity of o/t for ...
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Monopoly markets

A monopoly can produce any output level at a constant marginal (and average) cost of θ per unit. Assume the monopoly sells its goods in two markets separated by some distance. The demand curve in the ...
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Demand Function in monopoly [duplicate]

I am studying monopoly and I see that most exercises use inverse demand. why use the inverse demand function instead of the demand function?
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How to find right MRP_L in this economic problem?

Economic problem from my textbook (here is my translation from Russian): There is a firm that is both monopoly and monopsony. It's monopoly on market of its product and it's monopsony on labor market ...
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Price elasticity and optimal pricing in a monopoly with zero marginal cost

I am having trouble understanding how to calculate the optimal price P for a good and understand the optimal price elasticity of demand in the following condition: The firm is a monopoly seeking to ...
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Why are some natural monopolies protected by the law from competition?

It just doesn't make sense. Any try to challenge a natural monopoly is fruitless (at the best) or an economic suicide (at the worst). Why would you forbid companies from doing such stupid move? It's ...
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Why would a natural monopoly lose money when MC=P, but a competitive firm would get positive accounting profit?

I assume that the natural monopoly is required by law to have maximum price=MC. According to this video such regulation would require constant subsidies for monopoly, because otherwise it would go ...
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Exercise about Monopoly price charging

In a two-period lived economy, one consumer wishes to buy a TV set in period 1. The consumer lives for two periods, and is willing to pay a maximum price of $100 per period of TV usage. In period ...
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Monopoly Profits [closed]

Have a question: In the town of Johnson, there are 100 identical citizens and one bus company. The bus company is owned by the citizens, each of whom receives 1% of the bus company’s profits. Nobody ...
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