MC MR 0 20 40 60 80 100 120 Quantity (tickets per hour) Which of the following i
ID: 1107365 • Letter: M
Question
MC MR 0 20 40 60 80 100 120 Quantity (tickets per hour) Which of the following is a TRUE statement? The single-price, unregulated monopoly shown in the figure above will sell 60 tickets/hour. Compared to a perfectly competitive industry with the same costs, a single-price, unregulated monopoly will decrease production by 40 tickets/hour. In the figure above, the deadweight loss created if the industry changes from perfectly competitive to a single-price, unregulated monopoly is $15 In the figure above, compared to a single-price, unregulated monopoly, a perfectly competitive industry with the same costs will raise the price by $1.50/ticket. None of the above is true.Explanation / Answer
Answer
Option
none of the above is true
The monopolist produces at MR=MC
Q=30
perfect competition produce at MC=P
Q=60
the single unregulated monopoly produce at Q=40
compared o perfect competition monopoly decreases output by
60-30=30 units
the deadweight loss=0.5*(60-30)*1.5
=$22.5
The monopoly price is higher than perfect competition by $1.5
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