Exam 14: Monopoly and Monopolistic Competition

When starting up, platform monopolies often spend money like it was free, and investors often are willing to provide money for them to do so. A likely explanation for this is that

At the socially optimum quantity of production, price equals:

If MC = Q/15 represents marginal cost for a monopolist and market demand is given by Q_d = 500 - 10P, the equation for marginal revenue is:

Monopolistic competition is similar to perfect competition in that:

For a monopolist, the price of the product:

Refer to the graph shown. If the firm seeks to maximize profit, it should set a price equal to:

If a monopolistically competitive market became perfectly competitive, output probably would:

Demonstrate graphically and explain verbally the difference between long-run equilibrium for a perfectly competitive firm and a monopolistically competitive firm.

Refer to the graph shown. If a competitive industry producing hamburgers is taken over by a pure monopoly firm that maximizes profit:

For a monopolistic competitor:

Refer to the graph shown. Assuming that this monopolist maximizes profit, the marginal cost of its last unit of output will be:

What is a central reason monopoly forces are especially strong in sectors dominated by platform businesses?

Which of the following is the best example of a market that exhibits network externalities?

The drug maker Wyeth produces the hormone-therapy drug Premarin, which is derived from the urine of pregnant mares. Not even Wyeth knows exactly what chemicals are in it, and the method of making the drug is a trade secret. Barr Laboratories has been trying to make a pill that is close enough to Premarin to be approved by the U.S. Food and Drug Administration as an "equivalent" drug. This story illustrates the importance of:

Refer to the graph shown. Producer surplus that is lost to society as a result of monopoly is:

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

Refer to the graph shown. If this monopolist sets the price to maximize profit, it will charge:

Does the following diagram illustrate a monopolistically competitive firm in a long-run equilibrium? If yes,explain why.If no,explain why not and redraw the diagram so that it is a long-run equilibrium.(Extra Credit: What forces move a monopolistically competitive industry to equilibrium?)

There are many restaurants in a city, each one offering food and services that differ from those of its competitors. There is also free entry of sellers into the market, and each seller serves a very small fraction of the total number of meals served each day. The restaurant industry in Raleigh is best categorized as:

Why are barriers to entry crucial to maintaining a monopoly?