Exam 14: Monopoly and Monopolistic Competition

Consider the following diagram: Demonstrate graphically and explain verbally why moving away from producing output level Q₀ will result in a decrease in profit for this monopolist.

The price at which a monopolistic competitor sells its product in both the long run and the short run is equal to:

iTunes charges British customers 20 percent more than customers in France and Germany. Apple defended the price difference, saying that the "underlying economic model in each country has an impact on how we price our track downloads." An economist would say that Apple is engaged in:

eBay.com dominates the online auction business because sellers want to go where the buyers are and buyers want to go where the sellers are. Bigger is thus better. Hence, eBay.com illustrates the concept of:

In long-run equilibrium in both perfect competition and monopolistic competition there is zero economic profit and yet the two cases are not identical.What is the key difference between them?

Demonstrate graphically and explain verbally an example of a monopolist earning a positive economic profit.

Why do some stores offer senior citizens discounts on Tuesdays?

At one time,the FCC auctioned off the rights to use public airwaves for wireless communications devices,receiving $23 billion dollars in bids for 4,249 licenses.More than $10 billion was turned over to the U.S.Treasury.These auctions may be thought of as a government sale of a monopoly since one company's use of a particular frequency prevents another from using it.Who gains and who loses when the government sells a monopoly,compared to the case where monopolies don't require licenses to operate? Explain.

Refer to the graph shown. If this monopolist were allowed to choose the profit-maximizing level of output, it would charge a price of:

Refer to the graph shown. The loss of surplus to consumers resulting from monopoly is:

Refer to the graph shown. If the monopoly firm maximizes profit, there will be a welfare loss equal to:

What aspect of a platform business tends to make it a monopoly?

A monopolistically competitive firm faces a downward-sloping demand curve.

If a monopolist increases sales from 10 to 11 by lowering its price from $40 to $38, its marginal revenue is:

A perfectly price-discriminating monopolist:

Refer to the graph shown. If the government's goal is to eliminate the welfare costs of monopoly, it will:

The DeBeers Company is a profit-maximizing monopolist that exercises monopoly power in the distribution of diamonds. If the company earns positive economic profits this year, the price of diamonds will:

Refer to the graph shown. The short-run equilibrium price for the monopolistically competitive firm represented is:

Refer to the graph shown. If the monopoly firm maximizes profit, it will produce:

Define monopoly.What is the primary reason for the existence of a monopoly? Describe three types of barriers to entry.