Exam 8: Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets

You are the manager of a firm that has an exclusive license to produce your product. The inverse market demand curve is P = 900 - 1.5Q. Your cost function is C(Q) = 2Q + Q². Determine the output you should produce, the price you should charge, and your profits.

The second-order condition for a firm maximizing its profits operating in a perfectly competitive market is:

You are the manager of a monopoly firm with (inverse) demand given by P = 50 - 0.5Q. Your firm's cost function is C = 40 + 5Q². Your firm's marginal revenue is:

There is no market supply curve in:

The second-order condition for a monopoly maximizing its profit is:

Consider a monopoly where the inverse demand for its product is given by P = 80 - 2Q. Total costs for this monopolist are estimated to be C(Q) = 100 + 20Q + Q². At the profit-maximizing combination of output and price, deadweight loss is:

The second-order condition for a firm maximizing its profit operating in a monopolistically competitive market is:

Genentech owns a patent on tissue plasminogen activator (TPA), which is an enzyme that helps the body break down blood clots. TPA is particularly valuable to cardiac patients, since it often allows heart problems to be treated with medication rather than surgery. Recently, however, firms in the medical industry have come under fire from some members of Congress and the press for charging high prices and earning monopoly profits. Do you think cardiac patients would benefit if the government stripped Genentech and other pharmaceutical firms of their patents? Explain.

A monopoly has produced a product with a patent for the last few years. The patent is going to expire. What will likely happen to the demand for the patent-holder's product when the patent runs out?

Which of the following is true under monopoly?