Exam 10: Market Power

A perfectly competitive firm can sell _____ of output at a given market price; therefore, its demand curve is:

A natural monopoly arises when an increase in output in the long-run leads to:

Firms that have market power face a _____ demand curve.

Use Figure: Monopoly Profit-Maximization and Deadweight Loss. The figure shows the demand curve, marginal revenue curve, marginal cost curve, and average total cost curve that are facing a monopolist. Suppose that the firm is operating at its profit-maximizing point. Given this, the resulting deadweight loss to the society is given by the area: ​ Figure: Monopoly Profit-Maximization and Deadweight Loss

In which one of the following markets do firms face a horizontal demand curve?

Ace Sports is a manufacturer of tennis rackets in a market that is monopolistically competitive. The firm is doing exceedingly well and currently is earning an economic profit of $1 million. Will Ace Sports be able to sustain its profits in the long run? Justify your answer.

Suppose that a monopolist is operating at its profit-maximizing point. If the marginal cost of production at this point is $4, the average total cost is $6, and the profit per unit is $ 6, then the marginal revenue is _____, and the price charged by the monopolist is:

Use Figure: Monopoly Profit-Maximization and Deadweight Loss. The figure shows the demand curve, marginal revenue curve, marginal cost curve, and average total cost curve that are facing a monopolist. Suppose that the firm is operating at its profit-maximizing point. Given this, the profit per unit of the firm is: ​ Figure: Monopoly Profit-Maximization and Deadweight Loss

Which one of the following statements is FALSE for a monopolistically competitive firm at its long-run equilibrium?

Resource allocation is efficient from a societal standpoint if the price of a good is equal to the _____ cost of production.

Use Figure: Monopoly Profit Maximization. The figure shows the demand curve, marginal revenue curve, marginal cost curve, and average total cost curve that are faced by a monopolist. Suppose that the firm is operating at its profit-maximizing point. The total revenue of the firm is _____, and the total cost of the firm is: ​ Figure: Monopoly Profit Maximization

Use Figure: Monopoly Profit Maximization. The figure shows the demand curve, marginal revenue curve, marginal cost curve, and average total cost curve that are faced by a monopolist. Suppose that the firm is operating at its profit-maximizing point. The profit per unit for the firm is_____, and the total profit is: ​ Figure: Monopoly Profit Maximization

Suppose that a firm in a monopolistically competitive market charges $10 for its good, sells 100 units of output, and has a marginal revenue of $6 in the long run. Given this, we can conclude that the marginal cost of production for the firm is _____ and the average cost of production is:

A monopolist's profit is maximized at the point where marginal cost is equal to:

A cartel refers to:

Relative to a perfectly competitive market, a monopolistically competitive market produces a_____ level of output and charges a _____ price.

Which one of the following statements is NOT true for a monopolist?

In which of the following scenarios would firms NOT be able to price discriminate?

Use Figure: Profit-Maximizing Quantity and Price. The figure depicts the demand curve, marginal revenue curve, and marginal cost curve that are facing a monopolist. Assume that the monopolist is operating at its profit-maximizing point. If the total profit of the monopolist is $200, then the profit per unit is: ​ Figure: Profit-Maximizing Quantity and Price

Use Figure: Monopoly Profit-Maximization and Deadweight Loss. The figure shows the demand curve, marginal revenue curve, marginal cost curve, and average total cost curve that are facing a monopolist. Suppose that the firm is operating at its profit-maximizing point. Given this, the firm's profit per unit is _____, and the total profit is: ​ Figure: Monopoly Profit-Maximization and Deadweight Loss