5, NATURAL MONOPOLY YOU WILL USE THIS INFORMATION FOR THIS QUESTION PLUS THE NEXT TWO QUESTIONS Your company is thinking about entering a new market You have run a regression on the market demand, and the results are below Quantity demanded is the dependent variable price and income are the independent variables SUMMARY OUTPUT Regression Statistics Multiple R 0 94123 R Square 0 8924844 Adjusted R Square 0 87267 Standard Error 2 34546124 Observations 33 Coefficients Standard Error t Stat P value Lower 95 Upper 95 Intercept 53 9989 2 0318 3 5745 0 0117 40 6292 216 962 Price 0 50288 0 24733 2 8958 0 01067 1 6386 0 2079 Income 0 210694 0 24733 2 8958 0 01067 1 6386 0 2079 Round the Intercept to a whole number Round the coefficients to one decimal place Assume Income is 60,000 and it just enters the function as 60 (as we've been doing all semester) Determine the demand function for this regression AND THEN use it to get the inverse demand function Which of the following is the inverse demand function Multiple Choice P 180 2 5 Q P 120 2 Q P 60 (1 2) Q P 132 2 Q 6, NATURAL MONOPOLY YOU WILL USE THIS ANSWER PLUS THE ANSWER TO QUESTION 5 TO ANSWER THE NEXT QUESTION This question follows Question 5 Below you have the ATC function for your firm ATC 90 18 Q 006 Q 2 What is the Q associated with minimum ATC and what is ATC at that Q Multiple Choice ATC is minimized at Q 15 and when Q 15, ATC approximately 88 65 ATC is minimized at Q 11 and when Q 11, ATC approximately 93 65 ATC is minimized at Q 25 and when Q 25, ATC approximately 80 65 ATC is minimized at Q 18 and when Q 18, ATC approximately 80 65 7, NATURAL MONOPOLY USE YOUR ANSWERS TO QUESTION 5 AND QUESTION 6 TO ANSWER THIS QUESTION Based on your answers to Question 5 and question 6, which of the following is correct Multiple Choice At the Q that minimizes ATC, P ATC Therefore this market is not a natural monopoly At the Q that minimizes ATC, P ATC Therefore this market IS a natrual monopoly At the Q that minimizes ATC, P is exactly ATC, therefore this market COULD BE a natural monopoly None of the above

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5, NATURAL MONOPOLY. YOU WILL USE THIS INFORMATION FOR THIS QUESTION PLUS THE NEXT TWO QUESTIONS. Your company is thinking about entering a new market.

NATURAL MONOPOLY.

YOU WILL USE THIS INFORMATION FOR THIS QUESTION PLUS THE NEXT TWO QUESTIONS.

Your company is thinking about entering a new market. You have run a regression on the market demand, and the results are below. Quantity demanded is the dependent variable; price and income are the independent variables.

SUMMARY OUTPUT

Regression Statistics

Multiple R 0.94123

R Square 0.8924844

Adjusted R Square 0.87267

Standard Error 2.34546124

Observations 33

Coefficients Standard Error t Stat P-value Lower 95% Upper 95%

Intercept 53.9989 2.0318 3.5745 0.0117 40.6292 216.962

Price -0.50288 0.24733 -2.8958 0.01067 -1.6386 0.2079

Income 0.210694 0.24733 -2.8958 0.01067 -1.6386 0.2079

Round the Intercept to a whole number. Round the coefficients to one decimal place.

Assume "Income" is 60,000 and it just enters the function as "60" (as we've been doing all semester). Determine the demand function for this regression AND THEN use it to get the inverse demand function. Which of the following is the inverse demand function?

Multiple Choice

P = 180 - 2.5*Q
P = 120 - 2*Q
P = 60 - (1/2)*Q
P = 132 - 2*Q

NATURAL MONOPOLY.

YOU WILL USE THIS ANSWER PLUS THE ANSWER TO QUESTION 5 TO ANSWER THE NEXT QUESTION

This question follows Question 5. Below you have the ATC function for your firm.

ATC = 90 - .18*Q + .006*Q²

What is the "Q" associated with minimum ATC and what is ATC at that "Q"?

Multiple Choice

ATC is minimized at Q = 15 and when Q = 15, ATC = approximately 88.65
ATC is minimized at Q = 11 and when Q = 11, ATC = approximately 93.65
ATC is minimized at Q = 25 and when Q = 25, ATC = approximately 80.65
ATC is minimized at Q = 18 and when Q = 18, ATC = approximately 80.65

NATURAL MONOPOLY.

USE YOUR ANSWERS TO QUESTION 5 AND QUESTION 6 TO ANSWER THIS QUESTION.

Based on your answers to Question 5 and question 6, which of the following is correct?

Multiple Choice

At the "Q" that minimizes ATC, P > ATC. Therefore this market is not a natural monopoly.
At the Q that minimizes ATC, P < ATC. Therefore this market IS a natrual monopoly.
At the "Q" that minimizes ATC, P is exactly = ATC, therefore this market COULD BE a natural monopoly.
None of the above.