Econ hw review

Which of the following conditions hold true for both the perfectly competitive firm and the monopoly at the profit-maximizing output level?

MR = MC

A cartel is a form of

collusion

how to find max revenue

find average and choose number closest to it but still greater than it

A single-price monopolist can sell 7 units at price of $30 per unit and 8 units at a price of $25 per unit. The marginal revenue of the 8th unit is $

-10

what are the benefits of price discrimination for monopoly

leads to greater profit

most competitive industry

low concentration ratio

If the monopoly store can perfectly price discriminate, what is the maximum amount of revenue it can receive?

720=180×4

Numerical fill in the blank question: Suppose that at this same firm's profit-maximizing level of output, average costs are ATC = $39. What are the firm's total profits earned?

90. profit=q×(P-ATC) also use previous questions answer

to be able to engage in profit maximizing price searching a monopoly firm must

be able to prevent the entry of other firms into the market for its product

a monopolists marginal revenue is..

below the firms demand curve

industry battle between incompatible product formats can occur if competing firms selling compatible products..

fail to take into account network effects

how do monopolists determine the price and quantity combo that maximizes SR

finding quantity at which MC=MR then using demand curve to find price

price taker

firm that cannot influence the market price

When considering perfect competition, the absence of entry barriers implies that

firms can enter and leave the industry without serious impediments

what is not a necessary condition for price discrimination

having a constant marginal cost

what does demand curve for product of a perfectly comp firm indicate

if the firm raises prices sales will fall to zero

The demand curve for the product of a monopolistically competitive firm

is downward sloping and relatively elastic

Advertising by monopolistically competitive firms can do all of the following EXCEPT

lower the price of the good

demand curve for product of perfectly comp firm is

perfectly elastic

all firms in perfect comp industry

produce identical products

why do firms in monopolistically comp market advertise

they want to differentiate their product

recently the US has faced more comp from overseas firms. does this have any impact on market power of US oligopoly firm

yes comp from overseas firms can substantially limit domestic firms market power

Which of the following is NOT a characteristic of monopolistic competition?

barriers to enter

Numerical fill in the blank question: Suppose a perfectly competitive firm has the marginal cost function of MC = 3Q. The market price is given by P = $45. How many units of output will the firm produce?

15 bc MC=P

In a long-run monopolistically competitive equilibrium,

P = ATC, and ATC is not at its minimum value

For a perfectly competitive firm, the short-run break-even point occurs at the level of output where

P = MC = ATC

under what form of monopoly regulation does monopolist have no incentives to keep cost low

average cost pricing

monopolistic comp

a market situation in which large number of firms produce similar but not identical products

In the long run equilibrium, a monopolistic competitor will produce to the point at which

actual average total costs are higher than the minimum of possible ATC

high concentration ratio

characterized by strategic dependence (oligopoly) and less competition

by reducing compatibility of iPod, apple can lower price elasticities of demand for apple products that are..

complementary to iPod

profit max output and price for monopoly is

crosses through intersection of MR and MC to point on demand curve

a profit maximizing monopolist earns economic loss when

demand curve lies completely below ATC curve

the demand curve for product of perfectly comp industry

downward sloping

One problem associated with a monopoly firm is that it

restricts output and charges a relatively higher price than a purely competitive industry

elasticity of demand for a monopolist

since every good has a substitute, even if imperfect, the demand for a good produced by a monopolist will not have zero price elasticity

A horizontal merger involves

the joining of two firms selling similar products

When comparing perfect competition and monopoly, a major assumption made is that

the marginal costs of production are the same under monopoly as under perfect competition

homogenous

the product sold by one firm is a perfect substitute of product sold by another firm in same industry