Log in
Economics
1
answer
0
watching
108
views

A firm (that produces a single type of product) has a long run Lerner index of 0.50 and marginal cost of $100.

Calculate the price charged by the firm for its product (The firm charges the same price per unit of its product to all customers at all times)

Which industry is the firm more likely in: Monopoly, or Monopolistic competition? Carefully explain your answer. Your answer must clearly indicate that you understand the concepts: Lerner Index, Monopoly, and Monopolistic Competition

Watch
1
answer
0
watching
108
views

For unlimited access to Homework Help, a Homework+ subscription is required.

Paramjeet Chawla
Paramjeet ChawlaLv8
28 Sep 2019

Unlock all answers

Get 1 free homework help answer.
Already have an account? Log in
Share

Related textbook solutions

Principles of Economics
2nd Edition, 2017
Openstax
ISBN: 9781947172364
Principles of Macroeconomics
2 Edition,
Openstax
ISBN: 9781947172388
Principles of Microeconomics
2 Edition,
Openstax
ISBN: 9781947172340

Related questions

There are 2 firms to consider here from 2 different industries. A firm in Industry A has MC of production = $100 and they know from historical experience that their Lerner index is 0.3. A firm in Industry B has MC of production = $35 and they know from historical experience that their Lerner index is 0.55.

a. Determine the optimal price that both firms should be charging.

b. Articulate which firm is more likely to earn 'excess profits' in the long-run and explain why this is your answer using your understanding of the connection between the Lerner index and industry concentration.

1) A natural monopoly exists when:

a. A few firms collude to make one large firm

b. Firms enter the industry as a result of profit incentives

c. Economies of scale provide large cost advantages to having one firm produce the industry's output

d. Firms naturally maximize regardless of market structure

 

2) A(n) ____ is a single firm with ___, whereas a(n) ___ implies an industry with ____ firm(s) and ____ .

a. Monopoly; barriers to entry; oligopoly; few; no barriers to entry

b. Oligopoly; no barriers to entry; monopoly; many; easy entry and exit

c. Monopoly; barriers to entry; monopolistic competition; many; easy entry and exit

d. Monopolistic competitor; barriers to entry; monopoly; one; barriers to entry

 

3) In monopolistic competition:

a. Each firm produces a product identical to that of every other firm in the industry

b. Firms are aware of their strategic interdependence

c. Firms earn large economic profits in the long run

d. Firms earn zero economic profits in the long run

 

4) A monopolistically competitive industry, such as corn snack chips, and a perfectly competitive industry, like wheat farming, are alike in that:

a. There are many firms in each industry

b. Firms in both types of industries produce similar but not identical products

c. Barriers to entry in both industries are large

d. Firms in both types of industries produce identical products

21)

Compared to the results in a perfectly competitive market, a monopoly does which of the following?

 

It charges a higher price.
 

It charges a price greater than the marginal cost.
 

It produces less output.
 

All of the above
 

None of the above

22)

"X-inefficiency" refers to the idea that

 

government restrictions on competition create a monopoly, which results in inefficiency.
 

the cost of rent-seeking activity should be added to the welfare cost of monopoly.
 

Generation X is less efficient due to a lack of competitive spirit.
 

a lack of competitive pressure results in a monopoly not keeping its costs down to the lowest possible level.
 

price discrimination results in inefficiently low cross-elasticities of demand.

23)

Firms in which of the following market structures can engage in price discrimination?

 

monopoly
 

oligopoly
 

monopolistic competition
 

All of the above
 

None of the above

24)

Monopolistic competition and perfect competition are in all of the following ways except

 

Barriers to entry are low in both
 

There are many firms in both
 

Firms in both produce the output level where MR=MC
 

Nonprice competition is important in both

25)

To get rid of excess capacity from the monopolistic competition in the long run, what would have to be given up?

 

Free entry and exit.
 

economic rent
 

resource allocative efficiency
 

differentiated product
 

productive efficiency

Weekly leaderboard

Home
Homework Help 3,900,000
Economics 400,000
Start filling in the gaps now
Log in