ECON 1B03 Lecture Notes - Lecture 9: Monopoly Profit, Natural Monopoly, Monopolistic Competition

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ECON 1B03 Full Course Notes

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Monopoly one seller of a product, whose product does not have close substitutes and is a firm price setter. Monopoly q and p decisions: the monopolies demand curve is the market demand curve downward sloping, change in total revenue is the price of that good minus the amount that price had to be reduced. Competitive equilibrium (cid:373)a(cid:454)i(cid:373)izes cs a(cid:374)d ps a(cid:374)d so(cid:272)iet(cid:455)"s (cid:449)elfare is (cid:373)a(cid:454)i(cid:373)ized (cid:449)hi(cid:272)h is the so(cid:272)iall(cid:455) efficient level (p = mc) A monopolist produces less than the socially efficient quantity of output and charges a higher price (p > The market supply curve is equal to a monopolies marginal cost. Mr is halfway between the y-axis and the demand curve (q intercept) A monopoly produces where mr = mc so, 50 6q = 8 + q q = 6. Substitute into demand (make sure it is demand): Dwl = (32 14) (10. 5 6)/2 = . 50. Ps = (6) (32 14) + (6) (14-8)/2 = .

Related Questions

When the demand for a good or service limits the quantity that can be sold to an output at which the firm experiences economies of scale, the ____.

A) firm is a single-price monopoly

B) good that the industry produces has close substitutes

C) firm is a natural monopoly

D) firms are protected from competition by a legal barrier

carminegoldfish488

35. If your competitors will follow your price cuts and ignore price hikes, your firm:
A. faces perfect competition.
B. faces a kinked demand curve.
C. is the marginal price leader of an oligopoly.
D. must be the most efficient firm in the industry.

36. Sticky prices in oligopoly markets are:
A. represented by the kinked demand curve model.
B. typical of cartels.
C. most common for highly differentiated products.
D. a result of price discrimination.

37. Oligopoly is characterized by all of the following except:
A. some industries that produce identical products.
B. frequent price wars.
C. high barriers to entry.
D. prices that are above the minimum of the ATC curve.

38. Which statement is false?
A. A monopoly is both a firm and an industry.
B. A monopoly is an imperfect competitor.
C. There are monopolies in the United States at the regional and local levels.
D. None of these statements is false.

39. Each of the following is a legal barrier to entry into an industry except:
A. government licensing.
B. patents.
C. government franchising.
D. All of these choices are legal barriers.

40. Which one of these is not a natural monopoly?
A. A local electric company
B. A local natural gas company
C. A local cable TV company
D. All of these choices are examples of natural monopolies.

whitecod944

Select the correct answer:

A (legal; natural) monopoly exists when one firm can meet the entire market demand at a lower average total cost than two or more firms could.

A monopoly that is able to sell different units of a good or service for different prices is a (natural-price; price-discriminating) monopoly.

The act of obtaining special treatment by the government to create an economic profit is called (government surplus; rent seeking).

Regulated firms have an incentive to inflate their costs under (rate of return; price cap) regulation.

The U.S. Postal Service has a (natural; legal) monopoly on first class mail delivery.

A (single-price; price discriminating) monopoly maximizes profit by producing the quantity at which marginal revenue equals marginal cost and then charging the maximum price that consumers are willing to pay for that quantity.

The key idea behind price discrimination is to convert (consumer surplus; producer surplus) into economic profit.

ECON 1B03 Lecture Notes - Lecture 9: Monopoly Profit, Natural Monopoly, Monopolistic Competition

ECON 1B03 Full Course Notes

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