ECON101: Assignment 12
A single-price monopoly can sell 2 units for $8.50 per unit. In order to sell 3 units, the price must be $8.00 per unit. The marginal revenue from selling the third unit is
$7.00.
The figure above shows the demand, marginal revenue, and marginal cost curves for Paul's Parrot pillows, a single-price monopoly producer of pillows stuffed with parrot feathers. When Paul maximizes his profit, the price is ________ per pillow and the marginal cost is ________ per pillow.
$70; $40
If we compare a perfectly competitive market to a single-price monopoly with the same costs, the monopoly sells
a smaller quantity at a higher price.
Which of the following is a legal barrier to entry? i.public franchise ii.government license iii.patent
i, ii, and iii
A group of firms that has entered into an agreement to restrict output and increase prices and profits is called
a cartel.
When firms in an oligopoly successfully collude and do not cheat on a cartel agreement, they can make a long-run economic profit similar to
monopoly.
The above figure shows the market demand curve for telephone calls. Suppose the marginal cost of a telephone call is 2¢ a minute for a call no matter how many minutes of calls are made and there are 3 firms in the industry. If the firms in the industry operate as perfect competitors, there are ________ minutes of calls made per hour.
more than 7 million and less than or equal to 9 million
A natural barrier to entry is defined as a barrier that arises because of
technology that allows one firm to meet the entire market demand at lower average total cost than could two or more firms.
In the above figure, the profit-maximizing output for this single-price monopoly is ________ units and the price is ________.
200; $30
Use the figure above to answer this question. Pam gives the only piano lessons in town. In order to maximize profit, Pam should give ________ per day and charge ________ per lesson.
4; $40
In an oligopoly, there are
barriers to entry and only a few firms.
To be able to price discriminate, a firm must
be able to prevent resales of its good.
A cartel is a collusive agreement among a number of firms that is designed to
decrease output and raise prices.
The tool that economists use to analyze the mutual interdependence of oligopolies is
game theory.
Boeing and Airbus have entered into a cartel agreement that will enable them to boost their profits. What occurs if Boeing decides to cheat on the agreement? i.Boeing lowers the price of its airplanes. ii.The total industry output increases. iii.The total profits in the airplane industry will decrease.
i, ii, and iii
The graph shows the the LRAC facing a ________ where ________ of scale exist when 5 million units are produced.
natural monopoly; economies
The fact that firms in oligopoly are interdependent means that
one firm's profits are affected by other firms' actions.
Which of the following is TRUE? In the above figure, if the market is
perfect competition, output will be Q2 and price will be P2.
One way to identify oligopoly is to
use the Herfindahl-Hirschman Index (HHI).