Monopoly Comp. & Oligopoly

Refer to 16.12. When this firm profit maximizes, what is the amount of the firms profit or loss?

$0

Refer to t17.1. If this market for water were perfectly competitive instead of monopolistic, what price would be charged?

$0

Refer to 16.11, If this profit maximizes, how much cost will it incur?

$1000

Refer to 16.11. If this firm profit maximizes how much revenue will it earn?

$1500

Refer to t17.1. Suppose the town enacts new antitrust laws that prohibit them from operating as a monopoly. What will be the price of water once they reach a Nash equilibrium?

$20

Refer to 16.4. At the profit maximizing, or loss minimizing, output level, the firm in this figure has total costs of approximately:

$21,000

Refer to 16.4. The firm in this figure has a total revenue of approximately:

$24,000

Refer to 16.4. The maximum total short run economic profit for the firm in this figure is:

$3,000

Refer to T16.4. What price will this firm charge to maximize profit?

$30

Refer to T17.1. If Rochelle and Alec operate as a profit maximizing monopoly in the market for water, what price will they charge?

$30

Refer to 16.12. If this firm profit maximizes. what price will it charge?

$58

Refer to 16.4. What price will the firm charge in this market?

$800

Refer to T16.4. At the profit maximizing level of output, what is this firms total cost?

$88

Refer to T17.1. How much profit will each of them earn?

$9,000

As a group, oligopolists would always be better off if they would act collectively:

as a single monopolist

In a monopolistic industry, a firms demand curve also represent its:

average revenue

For a monopolistically competitive firm:

average revenue and price are the same

A profit maximizing firm in a monopolistic market is characterized by which of the following:

average revenue exceeds marginals revenue

Due to free entry and exit in monopolistic competition, in the long run price must be equal to:

average total cost

For a profit maximizing monopolistic firm, marginal revenue equals marginal cost in:

both the short run and the long run

For a profit maximizing monopolistic firm, price exceeds marginal cost in:

both the short run and the long run

Entry of new firms in monopolistic industries can convey a negative externality on producers because firms lose customers and profits from the entry of new competitors. This is called:

business-stealing externality.

If four firms comprise the entire golf club industry, the market would be:

characterized by interdependence of firms

As a group, oligopolist would always earn the highest profit if they would:

charge the same price that a monopolist would charge if the market were a monopoly

In the short run, a firm operating in a monopolistic market:

chooses a price that exceeds marginal revenue

To maximize its profit, a monopolistic firm:

chooses its quantity and price, just as a monopoly does

An agreement among firms in a market about quantities to produce or prices to charge is called:

collusion

A distinguishing feature of an oligopolistic industry is the tension between:

cooperation and self interest

Product differentiation causes the seller of a goof to face what type of demand curve?

downward sloping

A firm that is monopolistic market faces a:

downward sloping demand curve because the firms product is different from those offered by other firms

If two firms comprise the entire soft drink market, the market would be a:

duopoly

The simplest type of oligopoly is:

duopoly

An agreement between two duopolists to function as a monopolist usually breaks down because:

each duopolist wants a larger share of the market to capture more profit

Monopolistic firms could reduce the average total cost of producing by increasing output; therefore, these firms have:

excess capacity

A profit maximizing firm in a monopolistic market differs from a firm in a perfectly competitive market because the firm in the monopolistic market:

faces a downward sloping demand curve for its product

Refer to 16.11. What, if any, long run adjustment will occur in this industry?

firms will enter, price will decrease, profits will equal zero

Because monopolistic firms produce differentiated products, each firm:

has some control over product price

Refer to 16.12. Compare the price and marginal cost in this market with price and marginal costs if this were a perfectly competitive market.

monopolistic competition: P>MC perfect competition: P=MC

For a profit maximizing monopolistic firm, marginal revenue exceeds marginal cost in:

neither the short run or the long run

Refer to 16.12. Does this monopolistic market produce the welfare maximizing level of output?

no

Refer to 16.12. What, if any, long run adjustment will take place in this industry?

none

Game theory is necessary to understand which kinds of market?

oligopoly, duopoly

Considering perfect competition, monopolistic competition, and monopoly, which structure results in production of the welfare maximizing level of output?

perfect competition

Considering perfect competition, monopolistic competition, and monopoly, which of the market structures features entry in the long run?

perfect competition, monopolistic competition

When a market is monopolistically competitive, the typical firm in the market is likely to experience a:

positive or negative profit in the short run and a zero profit in the long run

As the number of firms in an oligopoly increases, the magnitude of the:

price effect decreases

A profit maximizing firm in a monopolistic market is characterized by which of the following?

price exceeds marginal cost

For a monopolistic firm, at the profit maximizing quantity of output:

price exceeds marginal cost

Product differentiation in monopolistic markets ensure that, for profit maximizing firms:

price will exceed marginal cost

If the government forces this firm to produce at its efficient scale, it will:

produce 5 units and lose $5

When a new firm considers entering a market, it takes into the account only the profit it would make. What are the two external effects that occur in the market that the firm does not consider?

product - variety externality, business - stealing externality

Entry of new firms in monopolistic industries can convey a positive externality on consumers because new products result in more consumer surplus. This externality is called the:

product-variety externality

Refer to 16.11. If this firm profit maximizes, how much profit or loss will it earn?

profit of $500

In the short run, a firm operating in a monopolistic market:

sets price equal to demand where marginal revenue equals marginal cost

Because each oligopolist cares about its own profit rather than the collective profit of all the oligopolists together:

they are unable to maintain the same degree of monopoly power enjoyed by a monopolist

Refer to 16.12. How much excess capacity does this firm have?

6 units

Refer to T17.1. How many gallons of water will be produced and sold?

600

Which of the following are correct?

1) If duopolists successfully collude, then their combined output will be equal to the output that would be observed if the market were a monopoly 2) Although the logic of self-interest decreases a duopoly's price below the monopoly price, it does not push the duopolists to reach the competitive price 3) all of the above

Which of the following is a characteristic of a monopolistic firm in the short run equilibrium?

1) P=AR 2) MR=MC 3) P>MC

Which of the following conditions is a characteristic of a monopolistic firm in the short run equilibrium?

1) P>ATC 2)P=ATC 3)P<ATC

In the short run, a firm operating in a monopolistic market can earn:

1) positive economic profits 2) economic losses 3) zero economic profits

As the number of sellers in an oligopoly becomes very large, :

1) the quantity of output approaches the socially efficient quantity 2) the price approaches marginal cost 3) All of the above are correct

A firm in a monopolistic market is similar to a monopoly in the sense that:

1) they both face downward sloping demand curves 2) the both charge a price that exceeds marginal cost

Refer to t17.1. If the market for water were perfectly competitive instead of monopolistic, how many gallons would be produces and sold?

1,200 gallons

Refer to t17.1. What is the socially efficient quantity of water?

1,200 gallons

The firm has a total fixed cost of $9 and a constant marginal cost of $3 per unit. The firm will maximize profit with:

15 units of output

The firm has total fixed costs of $100 and a constant marginal cost of $25 per unit. The firm will maximize profit with the production of:

16 units of output

For the economy as a whole, about what percentage of total firm revenue is spent on advertising?

2%

Refer to 16.12. If this firm profit maximizes, how much output will it produce?

22

Refer to 16.12. If this firm minimized cost, how much output will it produce?

28 units

Refer to 16.4. How many units of output will the firm in this figure produce?

30

To maximize profit, the firm will produce:

30 units

Refer to T16.4. What is this firms profit maximizing level of ouput?

4 units of output

Refer to T16.4. If the government forces this firm to produce at its efficient output level, how much output will this firm produce?

5 units of output

Refer to 16.13. Which letter represents the profit maximizing price?

B

Suppose that Bieber and Rihanna are duopolists in the music industry. In May, they agree to work together as a monopolist, charging the monopoly price for their music and producing the monopoly quantity of songs. By June, each singer is considering breaking the agreement. What would you expect to happen next?

Bieber and Rihanna will each break the agreement. Both singers profits will decrease

If a certain market were a monopoly, then the monopolist would maximize its profit by producing 4,000 units of output. If,instead, that market were a duopoly, then which of the following outcomes would be most likely if the duopolists successfully collude?

One duopolist produces 2,400 units of output and the other produces 1,600 units of output

Refer to T16.4. Which of the following is likely to happen in the long run in this market?

Firms are likely to enter the market since firms are earning a positive economic profit

Refer to 16.4. Which of the following will occur in the long run in this industry?

Firms will enter this industry

Which of the following conditions is a characteristic of a monopolistic firm in the short run?

P>MC

Refer to 16.13. Which letter represents the profit maximizing quantity?

L

As the number of firms in an oligopoly increases the:

Price approaches marginal cost, and the quantity approaches the socially efficient level

Which of the following statements are correct?

When oligopoly firms collude, they are behaving as a cartel

Refer to 16.4. Assume the firm in the figure in currently producing 20 units of output and charging $925. The firm:

Will increase its profits if it lowers its price and expands its production level

Refer to T16.4. If the government forces this firm to produce at its efficient output level, how much profit will this firm earn?

a $25 profit

Refer to T16.4. How much profit will this firm earn when it chooses its output to maximize profit?

a $32 profit

A special kind of imperfectly competitive market that has only two firms is called:

a duopoly

A monopolistically firms choice of output level is virtually identical to the choice made by:

a monopolist

In a monopolistic competitive industry, firm set price:

above marginal cost since each firm is a price setter

Considering perfect competition, monopolistic comp, and monopoly, which of the structures can have positive profits in the short run?

all

Refer to 16.4. The firm is monopolistically competitive. This firm:

is earning a short run economic profit

When a market is monopolistically competitive, the typical firm in the market can earn:

losses in the short run and zero profit in the long run

A monopolistic firm chooses the quantity to produce where:

marginal revenue equals marginal cost

To maximize its product, a monopolistic firm chooses its level of output by looking for the level of output at which:

marginal revenue equals marginal cost

The profit maximizing rule for monopolistic markets are to always select the quantity at which:

marginal revenue is equal to marginal cost

In the short run, a firm in a monopolistic market operates much like a:

monopolist

If "too much choice" is a problem for consumers, it would occur in which market structures?

monopolistic competition

A monopolistic firm is currently producing 20 units of output. At this level of output the firm is charging a price equal to $20, has a marginal revenue equal to $12, has marginal cost equal to $12, and has average total cost equal to $18. From this information we can infer that:

the firm is currently maximizing profit

When a profit maximizing firm in a monopolistic market charges a price higher than marginal cost:

the firm may be incurring economic losses

Each firm in a monopolistically competitive industry faces a downward sloping demand curve because:

the firms product is different from those offered by other firms in the market

In markets characterized by oligopoly:

the oligopolists earn the highest profit when they cooperate and behave like a monopolist

A monopolistic competitive firm chooses:

the quantity of output to produce and the price at which it will sell its output

A firm operating in a monopolistic market can earn economic profits in:

the short run but not in the long run