Why might a monopoly operate in any part (downward sloping, flat, upward sloping) of its long-run average cost curve, but a competitive firm will operate only at the bottom or in the upward-sloping section?
Answer to relevant QuestionsAT& T Inc., the large U. S. phone company and the one- time monopoly, left the payphone business at the beginning of 2009 because people were switching to wireless phones. U.S. consumers owning cellphones reached 80% by 2007 ...Why is the ratio of the monopoly’s price to its marginal cost, p/MC, larger if the demand curve is less elastic at the optimum quantity? Can the demand curve be inelastic at that quantity? What is the effect of a lump-sum tax (which is like an additional fixed cost) on a monopoly? A monopoly’s inverse demand function is p = 100 – Q + (5A - A2) / Q, where Q is its quantity, p is its price, and A is the level of advertising. Its marginal cost of production is constant at 10, and its cost of a unit ...In the examples in Table 10.1, if the movie theater does not price discriminate, it charges either the highest price the college students are willing to pay or the one that the senior citizens are willing to pay. Why ...
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