4.

The Chinese government’s tobacco monopoly accounts for 12% of the government’s revenue. It sells to China's 310 million smokers, 1/4 of the world's smoking population, who consume 1700 billion cigarettes a year, about 30% of global consumption

By imposing a 230% tax rate on foreign cigarettes, and by imposing import quotas and restrictions, the government limited legal foreign cigarette sales to less than 2% of total Chinese sales in the late 1990s. However, by 2003 the foreign cigarette share was only 10%. To appease the World Trade Association, China agreed to lift restrictions on the retail sale of imported cigarettes by January 2004, to reduce the tariff on cigarettes from the current 65% to 24% , and to phase out the tariff over the next two years. Thus, the state's monopoly will be eroded.   Expectations were that the price of imported cigarettes would drop by half and imported cigarettes would gain a major share of the Chinese market.   

1. In this case study discuss the impacts of the quotas, tariffs and restrictions on Entry into the Chinese market. What was the intended end result? Explain.

2. Given your answer in (a), use a graphical analysis to demonstrate and explain what occurred after the restrictions were lifted.

A firm faces the demand curve: P = 4,762 - 5Q. What is the firm’s revenue maximizing price

1)In monopolistic​ competition, profit is maximized when the amount produced is such that

A.

marginal revenue is greater than marginal cost.

B.

marginal revenue equals marginal cost.

C.

total revenue is maximized.

D.

total revenue equals total cost.

2)Dole Co. operates in a monopolistically competitive market. To try to earn an economic​ profit, Dole Co. will

A.

increase output.

B.

prevent other firms from entering the market.

C.

continually seek to differentiate its product.

D.

increase its​ product's price.

3) How does a​ single-price monopoly determine the price it will charge its​ customers?

A​ single-price monopoly​ _______.

A.

produces the quantity at which marginal revenue equals marginal cost and sets the price equal to marginal revenue at that quantity

B.

charges the price from the demand curve that corresponds to the quantity where the price elasticity of demand equals 1

C.

produces the quantity at which average total cost is minimized and charges the highest price consumers will pay for that quantity from the demand curve

D.

produces the quantity at which marginal revenue equals marginal cost and charges the highest price consumers will pay for that quantity from the demand curve

4) What are some of the ways that​ real-world airlines price​ discriminate?

​Real-world airlines price discriminate by separating travelers according to​ _______.

A.

their price elasticity of​ demand, their form of​ identification, and whether they are traveling first class or economy

B.

how far in advance they purchase​ tickets, physical disabilities that make boarding​ difficult, and the length of time required to make a connection

C.

their price elasticity of​ demand, whether they will stay at their destination over a​ weekend, and how far in advance they purchase tickets

D.

their willingness to go through airport​ security, their proximity to an​ airport, and the number of children traveling in the family

5) AT&T Moves Away From​ Unlimited-Data Pricing

​AT&T said it will eliminate its​ $30 unlimited data plan as the crush of data use from the iPhone has hurt call quality.​ AT&T is introducing new plans costing​ $15 a month for 200 megabytes of data traffic or​ $25 a month for 2 gigabytes.​ AT&T says those who exceed 2 gigabytes of usage will pay​$10 a month for each additional gigabyte.​ AT&T hopes that these plans will attract more customers.

​Source:

The

Wall Street

Journal​,

June​ 2, 2010

Explain why​ AT&T's new plans might be price discrimination.

​AT&T's new plans might be price discrimination because​ ______.

A.

​AT&T is selling data plans at different prices but its marginal cost is the same regardless of how much data is downloaded

B.

​AT&T is a monopoly and only monopolies can price discriminate

C.

​AT&T changed their price structure because of an increase in demand for data traffic

D.

the cost of supplying different sizes of data plans increases as more data is downloaded

A profit-maximizing monopolist charges a price of $36. The intersection of the marginal revenue and marginal cost curves occurs where output is 20,000 units and marginal cost is $24. Average total cost for 20,000 units of output is $32. As a result, the monopolist’s profit is more than $80,000.

true or false

The continuous downward slope of the average total cost curve suggests that the profit-maximizing natural monopolist is able to exploit economies of scale to keep competitors from successfully entering the market

true or false

Suppose that a monopoly firm maximizes its profit by producing 10,000 units of output. At that level of output, its marginal revenue is $30, its average revenue is $50, its average total cost is $45 and average variable cost is $38. If the firm operates at the output amount where marginal cost is $30, then the firm’s profit is less than $75,000 but more than $60,000.

true or false

In using the graph for a monopolist, with demand, marginal revenue, marginal cost, and average total cost curves, explain how you find the profit maximizing level of output. (Note that this question asks about OUTPUT. The next question asks about PRICE.)

A company shipped 6,000,000 pounds of goods to customers at a cost of $3,000,000. Total revenue is $40 million. If an individual customer orders 10,000 pounds, calculate the amount of shipping cost assigned to the customer using activity-based costing.

The records of Sweet’s Boutique report the following data for the month of April.

Compute the ending inventory by the conventional retail inventory method. (Round ratios for computational purposes to 0 decimal places, e.g. 78% and final answer to 0 decimal places, e.g. 28,987.)

Why is the marginal revenue curve for a perfectly competitive firm the same as its demand curve?