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