Exam 14: Monopoly and Monopolistic Competition

Demonstrate graphically and explain verbally the long-run equilibrium for a monopolistically competitive firm.How does this differ from the long run equilibrium of a monopoly firm?

Refer to the graph shown of a monopolistically competitive firm. The graph shows that:

How are a monopolist's price,output,and profit determined graphically?

With a natural monopoly, the minimum price a single firm must charge to make a profit:

The demand curve for a monopolist is:

Refer to the graph shown. According to the graph, this monopolistically competitive industry is currently:

Refer to the graph shown. Assuming that the monopoly maximizes profit, the social cost of monopoly will be:

As firms leave a monopolistically competitive industry that is sustaining economic losses:

The difference between a monopolist and a monopolistic competitor is that:

Refer to the following graph. If the demand curve is curve D for a monopoly, the marginal revenue curve is:

Suppose marginal cost is constant and equal to 100 and market demand is given by Q_d = 20- 1/10P. A profit-maximizing monopolist will set price equal to:

Long-run equilibrium for firms in monopolistically competitive industries is similar to that for firms in perfect competition in that:

As manager of a mutual fund,your job is to buy stocks in companies whose stock price will rise.You decide to only buy stocks of monopoly companies rather than perfectly competitive companies.Your rationale: the monopoly company stocks are a "sure-thing" since customers have no alternative suppliers,which means monopolies earn much more profit than perfectly competitive firms (which you expect to result in higher stock prices for the monopoly companies).What is wrong with assuming that monopolies must be profitable? Explain,using a diagram to illustrate your explanation.

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

Monopolies that exist because economies of scale create a barrier to entry are called:

If the demand for a newly released novel is less price-elastic than the demand for an older novel, which of the following pricing strategies would a price-discriminating publishing firm follow?

A price-discriminating monopolist will make less in profit than will one that does not price-discriminate.

How and why are the decisions facing a monopolist different from the collective decisions of firms in a perfectly competitive market?

Suppose that the men's suit business is monopolistically competitive. It follows that in equilibrium, the marginal revenue of any firm in the industry:

Since marginal revenue is less than price for a monopolist, a monopolist maximizes profits by equating marginal revenue and marginal cost, not price and marginal cost.