MONOPOLY MONOPOLY Raw materials and inputs Restricted ownership Sunk costs Location Economies of scale SOURCES OF MONOPOLY POWER Government restrictions CHAPTER 15 Cost Average total cost 0 Quantity of Output ECONOMIES OF SCALE Natural monopolies ! MONOPOLY 319 Figur e 15-1 E CONOMIES OF S CALE AS A C AUSE OF M ONOPOLY. When a firm’s average-total-cost curve continually declines, the firm has what is called a natural monopoly. In
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the importance of publicity for a successful launch of credit cards from our bank, I went ahead using all the modes of publicity. After careful calculations (Seen in Exhibit 1 and 2) of customer acquisition, I came up with the cost per customer value. To begin with, the cost per customer for affluent population alone is less compared to all customers. Having decided to check the feasibility of starting the credit card business for both middle class and affluent or just for the affluent class, I calculated
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Boris Higgins Team Deliverable During week 1 Team “A” was assigned to read chapters 1, 2, 3, and 6 of Economics. On April 7, 2014 they received a lecture from Mr. Higgins. From this Team “A” gained a better understanding of economics, marginal cost, marginal benefits, and consumer surplus. Before getting started Team “A” had to understand the meaning of economics. What they learned from both their lecture and readings is that economics is the study of how to use scarce resources to satisfy unlimited
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maximized, or loss minimized, at the output at which marginal revenue (or price in pure competition) equals marginal cost, provided that price exceeds average variable cost (McConnell, Brue, & Flynn, 2009, p. 189). To determine these factors, Sony must quantify resource demands as well as optimum product price. When Sony launched the Playstation 4 it cost $381 to manufacture. Sony sold the product at $399, only $18 above the manufacturing cost (Hesseldahl, 2013). Profit on this product was almost
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Question 1 [8 points] a) For their thanksgiving holidays Americans eat turkey. This results in a spike in demand for turkeys in the weeks before Thanksgiving. Despite this, the price of frozen turkeys usually falls in the weeks leading up to Thanksgiving. Explain why using the economics of demand and supply. [3 points] Answer: The merchants predicted the increase in demand during thanksgiving and stock up more frozen turkey supplies beforehand. Therefore, the supply of frozen turkey increases
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farm and earning an accounting profit of $100 per acre. However, if he raised soybeans, he could earn $200 per acre. Is he currently earning an economic profit? Why or why not? 2. Determine whether each of the following is an explicit cost or an implicit cost: a) Payments for labor purchased in the labor market b) A firm’suse of a warehouse that it owns and could rent to another firm c) The wages that owners could earn if they did not work for themselves 3. What are economies of scale
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S245-S256_Krugman2e_PS_Ch18.qxp 9/16/08 9:23 PM Page S-245 chapter: 18 Public Goods and Common Resources 1. The government is involved in providing many goods and services. For each of the goods or services listed, determine whether it is rival or nonrival in consumption and whether it is excludable or nonexcludable. What type of good is it? Without government involvement, would the quantity provided be efficient, inefficiently low, or inefficiently high? a. Street signs b. Amtrak
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maximization, we must understand that profit is equal to total revenue (TR) less total cost (TC). Profit maximization occurs once total revenue exceeds total cost. A2. Marginal revenue is the change in total revenue from the sale of one additional unit. Marginal cost is the change in total cost as output changes by one unit. Profit maximization occurs when marginal revenue and marginal cost are equal. B. Marginal revenue is calculated by taking the change in total revenue / the change in quantity
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are various factors that need to be assessed. An organization must produce a product, tangible or intangible, to produce a profit. The product must be produced at a cost that is low enough so that when sold, the mark up of the item is enough to pay the cost of production and make a profit. To determine profit you would deduct the cost of production from the total revenue made. Once an organization can determine the profit margin, it can plan on future endeavors. Total revenue is defined as “the
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a) What is the equilibrium price and quantity of fertilizer in an unregulated, competitive market? 6 tons per day b) What is the efficient quantity of fertilizer? 4 tons per day c) Suppose government imposes a tax equal to the marginal external cost. What is the equilibrium price paid by consumers and the equilibrium quantity after implementation of the tax? Consumers will pay $1,200 per ton, and the efficient level of output at 4 tons per day will be achieved. d) At the output
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