In a certain monopolized industry with a constant ATC=$5, the price is $10/unit and 1,000,000 units...
In a certain monopolized industry with a constant ATC=$5, the price is $10/unit and 1,000,000 units are sold. Under competition, 4 million units would be sold. In this case, the welfare loss is:
Group of answer choices
$3,000,000
$15,000,000
none of the above
$10,000,000
$7,500,000
Homework Answers
$7,500,000
Reason: Welfare loss due to monopoly = 1/2 x (Change in Q) x (P-ATC)
Welfare loss = 1/2 x (4,000,000 - 1,000,000) x (10-5)
Welfare loss = $7,500,000
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Refer to the figure above. Assume this firm is in a
constant-cost industry. For this firm to be in long-run
equilibrium, the firm must be producing
Group of answer choices
a) q1 units of output.
b) q2 units of output.
c) q3 units of output.
d) an amount that is indeterminate from this information.
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