Exam 14: Monopoly and Monopolistic Competition

Refer to the table shown, which shows the demand schedule for a firm that has a monopoly on the sale of computers in the country of Oz. If the marginal cost of producing computers is $1,000 no matter how many are produced and the monopolist seeks to maximize profit, it should set the price of computers at: $\begin{array} { | r | r | } \hline { \begin{array} { c } \text { Price of } \\\text { computers(\$) }\end{array} } & \text { Quantity demanded per year } \\\hline 5,000 & 100 \\\hline 4,000 & 200 \\\hline 3,000 & 300 \\\hline 2,000 & 400 \\\hline 1,000 & 500 \\\hline\end{array}$

As the number of people who use Facebook increases, the value of Facebook to its users increases. This is an example of:

Platform monopolies:

If a firm has a monopoly over the sale of camera drones and seeks to maximize profits, it:

Under monopolistic competition, there are:

If a monopolist had no production costs, it would produce the output where marginal revenue intersects the quantity axis. At this point, the price elasticity of demand would be:

Refer to the graph shown. To maximize profit, the monopolistically competitive firm represented in this graph will produce:

Refer to the graph shown of average costs for a typical firm. If this industry consisted of one firm producing 1,000 units and one firm producing 500 units:

Give three real world examples of price discrimination practices that some companies follow.

An industry that has many sellers offering slightly differentiated products is called:

Refer to the graph shown. The profits earned by the monopolistically competitive firm represented equal:

The reason a profit-maximizing natural monopolist cannot set price equal to marginal cost is that it would:

A monopolist engages in price discrimination to:

Demonstrate graphically and explain verbally how forcing a natural monopoly to produce at the competitive market solution (P = MC)results in a loss for the monopolist.

Often, gas stations only a few miles apart differ in price by as much as $0.10 per gallon. The most likely explanation for this kind of price discrimination is that:

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

A purpose of advertising is to make the:

Refer to the graph shown. The monopolistically competitive firm represented is in:

Compare how P,ATC,MC,and MR are related to each other in the long-run equilibrium of a perfectly competitive firm and a monopolistically competitive firm.What is the key difference between them?

The law of demand states that the greater the quantity of a good purchased,the lower its price will have to be,other things held constant.Explain why monopoly firms see this law in action but perfectly competitive firms do not.