Question

Use the following to answer the next 4 questions Suppose gold mining in the US was a perfectly competitive industry with N = 40 firms. Over the years Mr. Barrick purchased the all individual gold mines. The industry is now a monopoly owned by Mr. Barrick $ 70 60 40 30 MC = AC 10 20 30 40 50 60 Q MR 32) The profit Mr. Barrick earns as a monopolist is a. $700 b. $600 c. $900 d. $1000 e. none of the above 33) Before Mr. Barrick monopolized the industry, the total industry output of N = 40 competitive firms was Q = a. 20 b. 30 c. 40 d. 60 e. none of the above 34) After monopolization price per unit increased by a. 20 b. 30 c. 40 d. 60 e. none of the above 35) What is the extent of inefficiency (DWL = loss of total surplus) as a result of monopolization of what used to be a competitive industry? a. 450 b. 400 c. 500 d. 350 e. none of the above

Answer 1

Answer:

32) - Option c i.e., $900.

33) - Option d i.e., 60.

34) - Option d i.e., 60.

35) - Option a i.e., $450.

Explanation:

32) - Mr. Barrick 's income as a corporation is $900.

Then, we apply the formula of profit maximization that is :

                    $Profit = quantity \times (price - AC)$

                                $=30\times(60-30)$

                                $=30\times30=900$

                    $Profit=\ 900$

33) - While Mr. Barrick controlled the market, the total manufacturing production of N = 40 competitive companies was Q = 60.

In a reasonably marketplace, companies can sell where the marginal cost remains equivalent to the demand curve or that MC remains equivalent to the demand curve at 60.

34) - After the monopoly cost per unit raised by $60.

Price as well as quantity shall be determined by the monopoly where MR = MC. Price is determined mostly on demand curve relating to that same points where MR = MC has been 60 as well and the quantities are determined also on the y-axis that is 30.

35) - $DWL(Dead\;Weight\;Loss) =\frac{1}{2} \times(60-30)\times(60-30)$

                                                   $=\frac{1}{2} \times30\times30$

                                                   $=\frac{1}{2} \times900=450$

                                        $DWL=\ 450$