ECO 1104 Lecture Notes - Lecture 15: Monopoly, Monopolistic Competition, Deadweight Loss
ECO 1104 Full Course Notes
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The following table shows the demand curve and cost information for a firm that is monopoly
Price | Quantity | TC |
$10 | 0 | $500 |
$9 | 200 | $1,000 |
$8 | 400 | $1,600 |
$7 | 600 | $2,500 |
$6 | 800 | $4,000 |
What quantity should they produce to maximize their profits?
200 units
400 units
800 units
600 units
Mary competes in a monopolistically competitive market. Suddenly, 5 new firms enter the market causing her perceived demand curve to shift. The following tables show her original and new demand curves and her cost information.
Assume that Mary can only choose from the quantities of output given in the table. By how will the quantity that she produces change after the new firms enter the market?
Original Demand Curve
Price | quantity | TC |
30 | 0 | $130 |
25 | 10 | $140 |
20 | 20 | $260 |
15 | 30 | $450 |
10 | 40 | $660 |
New Demand Curve
25 | 0 | $130 |
20 | 10 | $140 |
15 | 20 | $260 |
10 | 30 | $450 |
5 | 40 | $660 |
Decrease by 5
Decrease by 10
Increase by 10
Increase by 5
Monopolistic competitor has the following information about cost and demand
Quantity | Price($) | Total Revenue ($) | Marginal Revenue ($) | Total Cost ($) | Marginal Cost ($) | Average Cost ($) |
0 | 25 | 0 | 25 | 30 | ---- | ---- |
2 | 24 | 48 | 23 | 35 | 2.5 | 17.5 |
4 | 23 | 92 | 21 | 45 | 5 | 11.25 |
6 | 22 | 132 | 19 | 60 | 7.5 | 10 |
8 | 21 | 168 | 17 | 77 | 8.5 | 9.63 |
10 | 20 | 200 | 15 | 100 | 11.5 | 10 |
12 | 19 | 228 | 13 | 126 | 13 | 10.5 |
14 | 18 | 252 | 11 | 165 | 19.5 | 11.79 |
16 | 17 | 272 | 9 | 210 | 22.5 | 13.13 |
18 | 16 | 288 | 7 | 260 | 25 | 14.44 |
20 | 15 | 300 | 5 | 320 | 30 | 16 |
If this industry was perfectly competitive, what price would the good sell for?
$19
$23
$21
$15
Monopolistic competitor has the following information about cost and demand
Quantity | Price($) | Total Revenue ($) | Marginal Revenue ($) | Total Cost ($) | Marginal Cost ($) | Average Cost ($) |
0 | 25 | 0 | 25 | 30 | ---- | ---- |
2 | 24 | 48 | 23 | 35 | 2.5 | 17.5 |
4 | 23 | 92 | 21 | 45 | 5 | 11.25 |
6 | 22 | 132 | 19 | 60 | 7.5 | 10 |
8 | 21 | 168 | 17 | 77 | 8.5 | 9.63 |
10 | 20 | 200 | 15 | 100 | 11.5 | 10 |
12 | 19 | 228 | 13 | 126 | 13 | 10.5 |
14 | 18 | 252 | 11 | 165 | 19.5 | 11.79 |
16 | 17 | 272 | 9 | 210 | 22.5 | 13.13 |
18 | 16 | 288 | 7 | 260 | 25 | 14.44 |
20 | 15 | 300 | 5 | 320 | 30 | 16 |
What will the firm