1. A perfectly competitive firm is a price 2. A perfect competitive firm has a demand curve. ; whereas, a monopolist is a price demand curve; whereas a monopolist has a 3. For a perfectly competitive firm, P 4. A perfectly competitive firm will charge a price MC. 5. Considering a perfectly competitive market and a monopoly market, each with the same demand and marginal cost curves, Consumers' surplus is greater in the market. MR. MC; however, a monopolist charges a price MR, but for a monopolist P

1. A perfectly competitive firm is a price 2. A perfect competitive firm has a demand curve. ; whereas, a monopolist is a price demand curve; whereas a monopolist has a 3. For a perfectly competitive firm, P 4. A perfectly competitive firm will charge a price MC. 5. Considering a perfectly competitive market and a monopoly market, each with the same demand and marginal cost curves, Consumers' surplus is greater in the market. MR. MC; however, a monopolist charges a price MR, but for a monopolist P

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter16: Monopolistic Competition

Section: Chapter Questions

Problem 4PA

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Draw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the monopolists profit-maximizing output level. Now, think about a slightly higher level of output (sayQ0+1). According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?
3. A monopolist who is the exclusive producer of cricket bats in the UK faces a demand curve defined by P = 100 – 2Q and a short-run total cost curve of TC = 300 + 20Q. a. Given the above information, compute total revenue, marginal revenue, and marginal cost for this producer, and identify the optimal quantity, the optimal profit, and the equilibrium price. [10 marks] b. Considering the information from your answer to bullet point a., represent the monopoly market structure graphically. [5 marks]
3. Dumping. The firm Zapatero Ltd. has a monopoly on shoes in the Spanish market. Zapatero Ltd. can also sell in the international market which is perfectly competitive. However, the foreign firms are not allowed to sell in the Spanish market. The cost function of Zapatero Ltd. is TC = 2Q² – 12Q + 10, and the demand curve in Spain is P = 8 – 2Q. The price of shoes in the international market is 4. Determine graphically and anlytically the price of shoes in Spain and the international market. How is dumping defined in this case?
Question No. 18 Refer to the Figure below. What price will the monopolist charge in order to maximize profit? 10 MC ATC 6. - AVC 3. MR 0 1 2 3 4 5 6 7 8 9 10 Quantity (units per day) Question No. 19 Refer to the above Figure in question 18. At the profit-maximizing what is price, output, and total revenue is? Question No. 20 Explain why only normal profit may be earned in the long run in perfect competition? Price(£ per unit)
3. Jukt Electronics has the exclusive rights to sell microchips in Nirvana (i.e. it is a monopolist in Nirvana). The inverse market demand for microchips in Nirvana is given by P(Q) = 360 - Q where Q is measured in millions of chips and P in dollars per million chips. Jukt's marginal cost of producing microchips is given by MC(Q) = .5Q. a) How many millions of microchips will Jukt sell in Nirvana? At what price will it sell the microchips? Illustrate your answer. Be sure to indicate in your diagram the total quantity sold and the price at which it is sold. Microchips are also traded on the world market in a perfectly competitive market. The current market price is $100 per thousand. b) If Jukt has the option to sell chips on the world market (and remain a monopolist in Nirvana) will it? Briefly explain your answer. (You will be asked to calculate the amount in the next part. In this part simply explain why the firm might choose to sell to the world). c) At the price of $100 how many…
5. Bruce runs the only bar in town. An individual consumer's demand for bar drinks is Q = 8 - P. The bar's marginal cost is $2 per drink. a) Compute the profit-maximizing monopoly quantity, price, and profit from serving this single consumer if Bruce's Bar charges a constant price per drink rather than using some nonlinear pricing scheme. What would the quantity and profit be if the bar serves 100 consumers identical to this one on a typical night? (Answer: Q 3 units) =
Q99 A major difference between monopoly and perfect competition is that... a. Monopolistic firms tend to maximise revenue while perfectly competitive firms maximise profit. b. Perfectly competitive firms cannot maintain positive economic profits in the long run, whereas monopolists can. c. Monopolistic firms emphasise cost minimisation whereas perfectly competitive firms emphasise profit maximisation. d. Monopolists do not consider consumer demand when choosing price and output levels. e. Perfectly competitive firms can never earn economic profits; monopolistic firms always earn economic profits.
3. A monopolist movie streaming service has two kinds of movies in its library - Action (A) and Romantic Comedies (R). Demand: There are two groups of consumers (Group X and Group Y) for the streaming service with the following value for each movie genre: Genre A Value Group X $100 Group Y $80 Value Group X $50 Group Y $70 Cost: The cost of streaming each type of content is MCA = $0, MCR = $60. Efficient Outcome a) Describe the efficient outcome by filling the table below Should X consume? (Y/N) Should Y consume? (Y/N) Consumption of A Consumption of R Total Efficient Surplus Genre R Surplus from efficient consumption (Value - Cost)
Question 1a. With the aid of a diagram explain how a monopolist determines how muchoutput to produce and what price to charge. [4 marks]b. Explain how the perfectly competitive firm decides whether to operate or shutdown in the short run. [4 marks]c. Explain why firms operating in monopolistically competitive markets probablywill not earn an economic profit in the long run. [4 marks]d. Why does interdependence of firms play a major role in oligopoly but not inperfect competition or monopolistic competition? [4 marks]
1. Using a graph, show a situation in which a monopolist is incurring short-run losses. Explain how this is possible. 2. Julee has estimated the demand and marginal revenue for her product. They are P = 100 - 2Q (quantity) and MR = 100 - 4Q, respectively. She also experiences constant marginal cost of $16. a. Does Julee have any market power? How can you tell? b. What is Julee’s profit-maximizing quantity? c. What price should Julee charge at that profit-maximizing quantity? 3. Explain a situation in which, when holding costs constant, a monopolist that was earning economic profits in the past can later incur an economic loss.
5. The allocatively efficient quantity of product Z for the whole market is 2 million units. At that quantity, the demand for Z is at $5 and the average total cost for its single supplier is $7. The average total cost does not fall to $5 until 3.5 million units. Based on this data, the market for product Z is perfectly competitive a natural monopoly a legal monopoly monopolistically competitive productively efficient 7.If a monopolist begins to engage in perfect price discrimination where previously it charged a single price for all its customers, what would be true of its production figures? (2 points) Firm produces more; producer surplus increases; deadweight loss increases Firm produces less; charges higher price; economic surplus decreases Firm produces more; total economic surplus increases; consumer surplus disappears Firm loses allocative efficiency; charges lower price; deadweight loss decreases Firm reaches…
d. Suppose the government imposes an average pricing rule, requiring the monopolist to set its price equal to the average total cost. Place the point labeled “Average cost pricing” at the appropriate coordinates to indicate the firm's price and quantity under this rule. Please place the Monoploy Pricing, Marginal Cost Pricing, and Average Cost Pricing on their appropriate places on the graph. Thank you!