Q C.3.4.2 Discussion -Monopoly - Group A 5 From ECON-102-OMH-CRN55774 The unregulated Monopolist will produce a quantity based on the MC=MR Profit Maximizing Quantity. Monopoly Output MC=MR Monopoly Price. Find the quantity at MC=MR and draw up to the demand curve. (P=D) The Monopolist's Profit is found by (Price - Average Total Cost) The area EBCD in the graph. Since the Monopolists holds "Barriers to Entry" no other firms can enter the market and capture the profit. Hence the unregulated monopolist controls the profit. The Monopolist faces three prices : The unregulated Monopolist will produce at the Monopoly Price (P=D)-Economic Profit The regulated Monopolist will produce at the Fair Return Price (P= ATC) -Normal Profit The efficient Monopolist will produce at the Socially Optimal Price (P=MC) -Allocative Efficiency Your initial Post should have two components Part 1 Using the Monopoly Graph above complete the following: 1. Identify the Price and Quantity of the unregulated Monopolist 2. Identify the Price and Quantity of the regulated Monopolist. 3. Identify the Price and Quantity of the efficient or Socially Optimal Monopolist. Part 2 Demonstrate your knowledge by constructing a scenario (real or made up) using one of the following: 1. Unregulated Monopolist 2. Regulated Monopolist 3. Socially Optimal Monopolist Examples: Unregulated Monopolist Martin “Pharma Bro” Shkreli obtained control of the AIDS drug Daraprim, and then hiked the price from $13.50 per pill to $750 per pill. Regulated Monopolist The local Water company is raising the price per gallon of water due to increased costs of the production and delivery of water. Socially Optimal Monopolist Genentech announces that it will sell its anti-cancer drug Wallop for the marginal cost of production to ensure maximum distribution. More Help? • C.3.2.3 Advanced Explanation- Graphing Monopoly-Maximize Output and Profit • C.3.2.4 Advanced Explanation- Natural Monopoly • C.3.2.5 Advanced Explanation- Monopoly-Price Discrimination Discussion Question Requirements: Each student is required to post a 150 word response to the question. The student then must post at least a 50 word response to at lease ONE other student post. Post-=4 points. Comment = 2 Points Submit Original Post by the Due Date. Comments are open for four (4) days after the Due Date or until the Available Until Date