Reference no: EM131112432
Suppose you have been tasked with regulating a single monopoly firm that sells 50-pound bags of concrete. The firm has fixed costs of $30 million per year and a variable cost of $5 per bag no matter how many bags are produced.
a. If this firm kept on increasing its output level, would ATC per bag ever increase? (Click to select)YesNo.
Is this a decreasing-cost industry? (Click to select)YesNo.
b. If you wished to regulate this monopoly by charging the socially optimal price, what price would you charge? $ per bag.
At that price, what would be the size of the firm’s profit or loss?
At that price, the firm's (Click to select)profitloss equals $ million.
Would the firm want to exit the industry? (Click to select)YesNo.
c. You find out that if you set the price at $6 per bag, consumers will demand 30 million bags.
How big will the firm’s profit or loss be at that price? $.
d. If consumers instead demanded 40 million bags at a price of $6 per bag, how big would the firm’s profit or loss be?
At that price, the firm's (Click to select)profitloss equals $ million.
e. Suppose that demand is perfectly inelastic at 40 million bags, so that consumers demand 40 million bags no matter what the price is.
What price should you charge if you want the firm to earn only a fair rate of return? Assume as always that TC includes a normal profit.$ per bag.
|
What impact would deflation have on inserts rate
: During 2003, we began to stop worrying that inflation was a problem. Instead , we began to worry about deflation, a decline in the price level. Assume that the central bank ( federal reserve ) decided to hold the money supply constant. What impact wo..
|
|
Monetary theory and policy
: Monetary Theory and Policy. Use the equation of exchange to answer the following questions and assume that the velocity of money is fixed at V = 7.5 throughout this problem. Suppose that the economy is in long-run equilibrium. If the money supply is ..
|
|
Cases of taffy in monopolistically competitive market
: Sticky Stuff produes cases of taffy in a monopolistically competitive market. The inverse demand curve for its product is P = 50 - Q, Where Q is in thousands of cases per year and P is dollars per case.
|
|
Suppose the economy slips into recession
: Suppose the economy slips into a recession and the Fed takes action to stimulate the economy. What would specifically would the Fed normally do if they took an active approach to monetary policy (don’t base your answer on the most recent recession wh..
|
|
Regulating single monopoly firm
: Suppose you have been tasked with regulating a single monopoly firm that sells 50-pound bags of concrete. The firm has fixed costs of $30 million per year and a variable cost of $5 per bag no matter how many bags are produced. If this firm kept on in..
|
|
Experiencing prolonged period of economic growth
: Suppose the country is experiencing a prolonged period of economic growth, what would you expect to happen to the demand for money and why? If the Fed chooses not to accommodate this change in the demand for money by increasing the money supply, what..
|
|
The law of one price applies to all goods
: The "law of one price" applies to all goods, except those that: Which of the following would cause the U.S. demand curve for Japanese yen to shift to the right? Which of the following might cause the U.S. dollar to depreciate against the Japanese yen..
|
|
Now determine equilibrium quantity
: Assume that demand for a commodity is represented by the equation formula p= 90-2Qd Supply is represented by the equation formula p=-5+3Qs where Qd and Qs are quantity demanded and quantity supplied, respectively, and P is price. Using the equilibriu..
|
|
Protectionist measures are enacted because they
: Protectionist measures are enacted because they: Restrictions on imports of foreign steel into the U.S. will: If a bottle of French wine priced at 100 francs can be purchased for $50, the exchange rate is:
|