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Suppose a single firm in a market has cost function C(q) =24+4q+q2.

(a) Does the cost function exhibit economies of scale for all levels of output? If not, does it exhibit economies of scale for some levels of output? Explain.

(b) Suppose the demand for the product is q(p) =24/2p. Is this market a natural monopoly? Why or why not?

(c) Suppose the demand for the product is q(p) =12/2p. Is this market a natural monopoly? Why or why not?

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Chika Ilonah
Chika IlonahLv10
29 Sep 2019

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Related questions

A natural monopoly occurs when:

a. long-run average cost declines continuously through the range of demand.

b., a firm owns and controls an essential resource for production.

c. long-run average cost rises continuously as output increases.

d. economies of scale are obtained at relatively low output levels. 

Suppose a monopoly with a cost function of C(Q) = 4Q2 - 6Q + 200 faces a market demand of QD = 2,388 - 2P. A) Calculate the firm's total revenue, marginal revenue, and marginal cost. B) Calculate the profit-maximizing output and price. C) Over what range of prices is the demand for repairs inelastic? D) Why will the firm not produce a quantity at which the market demand is inelastic? E) Graph the demand, marginal revenue, and marginal cost curves for Wally's. On the graph, label the profit-maximizing level of output, price, consumer surplus, and deadweight loss.

When the demand for a good or service limits the quantity that can be sold to an output at which the firm experiences economies of scale, the ____.
 
A) firm is a single-price monopoly
B) good that the industry produces has close substitutes
C) firm is a natural monopoly
D) firms are protected from competition by a legal barrier

 

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