ECON 110 Connect Homework 4 Monopoly The Labor Market Assignment solutions complete answers

ECON 110 Connect Homework 4 Monopoly The Labor Market Assignment solutions complete answers 

 

Question 1

Refer to the graph and table below to answer three questions about a monopolist.

a. At what output rate is total revenue maximized?

b. What is MR at that output rate?

c. If the firm is currently producing at that rate of output identified in (a), should the firm increase, decrease, or not change the rate of production?

 

Question 2

Refer to the graph below to answer five questions about a monopolist.

a. What rate of output maximizes total profit?

b. What is the MR at that rate of output?

c. What is the price?

d. If output is increased by 1 pound beyond that point, MC is

e. If the firm expands production beyond the profit-maximizing quantity, profits will

 

Question 3

Calculate marginal revenue using the table, graph the marginal cost, demand, and marginal revenue curves, and answer four questions about output in a monopolistic catfish market.

Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.

a, b. Graph the marginal cost, demand, and marginal revenue curves on the graph below.

Instructions: Use the tools provided 'MC,' 'Demand,' and 'MR' to graph the marginal cost curve (8 points total, Q = 10, 11, ... 17), demand curve (8 points total, Q = 10, 11, ... 17), and marginal revenue curve (7 points total, Q = 11, 12, ... 17). 

c. At what rate of output is MR = MC?

d. What price will a monopolist charge for that much output?

e. If the market were perfectly competitive, what price would prevail?

f. How much output would be produced in perfect competition?

 

Question 4

Refer to the News Wire to answer two questions.

NEWS WIRE
MIMICKING MONOPOLY
OPEC Eases Oil Restraints

Vienna. Two years ago, OPEC took decisive action to push up the price of oil. Meeting here in Vienna, the 14 nations belonging to the Organization of Petroleum Exporting Countries (OPEC) agreed to cut back production by 1.2 million barrels a day. The curtailed supply, they knew, would force prices higher. And it worked. The price of oil has risen from a low of $27 a barrel in early 2016 to more than $80 a barrel last month.

OPEC's success in raising the price of oil has been a mixed blessing. American shale producers couldn't produce oil profitably at $27 a barrel. But they are ready and willing at prices above $50. So, the higher OPEC-managed price brought a gush of U.S. shale oil to the market. Russia, too, increased exports to take advantage of the higher prices. That flood of non-OPEC oil worried Saudi Arabia, the largest OPEC producer. To discourage further loss of market share, the Saudis convinced a reluctant Iran and other members to increase production limits now. At the June meeting, OPEC agreed to increase production quotas by 1 million barrels a day, raising their collective target to roughly 33 million barrels a day. If adhered to, the new limits should keep a lid on world prices for awhile.

a. According to the News Wire, by what percentage did oil prices rise between 2016-2018?

b. What is the minimum price per barrel required for U.S. shale producers to be profitable?

 

Question 5

NEWS WIRE
R&D BARRIERS
Stifling Would-Be Competition

Washington, DC—The Federal Drug Administration (FDA) today "named and shamed" the biggest pharmaceutical companies for stifling the development of generic drugs. Companies wanting to develop generic substitutes for branded drugs must prove the bioequivalence of their products to their branded counterparts. To do that, they need large supplies—typically 1,500 to 5,000 units—of the branded drug for testing. The generic companies complain that the branded companies deny or delay access to the needed inventory. When that happens, the generic companies can lodge a complaint with the FDA. The FDA today released a list of those complaints. Celegne topped the list, with 31 "inquiries," the largest number concerning access to its Revlimid drug, which sells for $20,000 a month to treat blood cancer and raked in over $8 billion in sales last year. The branded producers claim that they limit the distribution of their pricey drugs for safety reasons. Dr. Scott Gottlieb, FDA's commissioner, says the branded companies are "gaming the system" to suppress the development of generic substitutes.

If generic producers were able to produce a substitute for Revlimid that reduced Revlimid's sales by 50 percent, how much less revenue would Celegne take in per year?

Approximately       billion less

 

Question 6

Refer to the News Wire to answer two questions.

NEWS WIRE
LABOR SUPPLY
Thousands of Job Seekers Brave Heat to Get Amazon Jobs

Baltimore, MD. The line started forming at 4 a.m. By 8 a.m. there were over 3,000 people in the line snaking around Amazon's fulfillment center. Despite 85-degree heat and equally high humidity, these people were willing to stand in line for hours, just for a chance to land a job at Amazon's local fulfillment center. By the end of the day, over 4,500 job-seekers had applied for the 1,200 jobs Amazon had posted, which pay wages of around $14 an hour. Amazon held similar job fairs in 11 other cities around the nation, promising to hire as many as 50,000 new employees.

a. What was the apparent market surplus at the Amazon job fair?

b. If Amazon decreased wages to $13.50 per hour, what do you predict will happen to that market surplus?

 

Question 7

The following table depicts the number of grapes that can be picked in an hour with varying amounts of labor. Calculate marginal physical product (MPP) and then graph the total product (output) and MPP curves. 

Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.

Instructions: Use the tools provided 'TP' to graph the total output of grapes and 'MPP' to graph marginal physical product. Plot 9 points for TP (= workers 0 to 8) and 8 points for MPP (= workers 1 to 8).

 

Question 8

If the price elasticity of demand for labor is 0.15 and the wage increased from $13 to $15 an hour, what is the predicted decrease in the level of employment in percentage terms?

Instructions: Round your response to one decimal place.

 

Question 9

In November 2014, the Miami Marlins agreed to pay Giancarlo Stanton $325 million over 10 years.

If this salary were to be covered by ticket sales only, how many more tickets per game would the Marlins have to sell to cover Stanton’s salary in the 81 home games per year if the average ticket price is $60?

 

Question 10

Refer to the News Wire to answer one question.

NEWS WIRE
UNEQUAL WAGES
Most Lucrative College Degrees

College graduation does improve a person's income prospects. But all graduates aren't treated equally: What you majored in counts for a lot. Annual salary surveys by PayScale, Inc., confirm that a student majoring in engineering can expect to earn nearly twice the salary of a journalism major.

What Does Your Major Pay?

Assuming that a college graduate on average earns his or her MRP, what is the MRP for a newly hired Economics major in 2018?