This Question: 5 pts 8 of 24 (5 complete) ? | This Test: 100 pts pos ? The diagr

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This Question: 5 pts 8 of 24 (5 complete) ? | This Test: 100 pts pos ? The diagram on the right shows a firm (industry) that earns a normal return to capital if organized competitively. Price in the market place is P under competition. We assume at first that marginal cost is fixed at $50 per unit of output and that there are no economies or diseconomies of scale. 80 Total revenue for the competitive firm, assuming free entry, is S(Enter your response as an integer) Total cost to the competitive firm, assuming free entry, is s Enter your response as an integer.) MC $50 50 Consumer surplus under competition is S? (Enter your response as an integer.) MRm ng ary combining them into a single-firm monopoly protected from entry rcet The profe-maximizing price, P for a monopoly is s(Enter Now assume that you bought all the firms in this industry Dm by a patent. 2.700 :5.400 04.0000 12,000 16.000 Units of output, Q your response as an integer.) Total revenue from the monopoly is s(Enter your response n To as an integer) Total cost for a monopoly is s(Enter your response as an integer.) integer.) Consumer surplus for a monopoly is s(Enter your response Total profit for a monopoly is s (Entd your response as an as an integer.) The deadweight loss for a monopoly is s (Enter your Dat response as an integer) Which of the following expresses the correct set of relationships? eme Click to select your answerls).

Explanation / Answer

1.

Total revenue for the competitive firm = 50*5400 = $270000

2.

Total cost for the competitive firm = 50*5400 = $270000

3.

Consumer surplus = (1/2)*(80-50)*5400 = $81000

4.

Profit maximizing price for a monopoly = $65

5.

Total revenue from the monopoly = 65*2700 = $175500

6.

Total cost for a monopoly = 50*2700 = $135000

7.

Total profit for the monopoly = $175500-$135000 = $40500

8.

Consumer surplus = (1/2)*(80-65)*2700 = $20250

9.

Deadweight loss = (1/2)*(65-50)*(5400-2700) = $20250

10.

A

It is shown by the above results.

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