ECON545Week 3 Suggested Answers to Questions and Problems

NOTE: Please pay particular attention to the way that answers are stated, because these are the kinds of statements that will be looked for in the quizzes and final exam. In general, all answers need to be supported with appropriate reasoning.

CHAPTER 9

Chapter 9 Question 1

1. Neither are monopolies in the strictest sense, although each has monopoly power. Both exploit location well. In their local realm they have considerable monopoly power, but in both cases there are numerous competitors a short drive away.

Chapter 9 Question 6

6a. MR MC where output is 50 million units. From the demand curve, price will be 45, and total profits will equal 750 million [TR - TC (45 x 50 million) - (30 x 50 million)] 750 million.

6b. If...