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1. If the demand for a good increases at the same time as the supply of the same good decreases, what will happen to the equilibrium price and quantity of the good? Explain. 

2. What is the deadweight loss of monopoly? Show the deadweight loss when the monopolist can perfectly price discriminate.

3. What is the point of the long-run equilibrium of a monopolistically competitive firm. How does it compare to a competitive firm? 

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Related questions

1. Describe deadweight loss in your own word (Describe what is deadweight loss)

2. Which of the following are results regarding monopolies? There may be more than one correct answer.

a. A monopolist faces a perfectly elastic demand curve.

b. A monopolist has market power.

c. The equilibrium price in a monopoly is typically higher than the equilibrium price in a perfectly competitive market.

d. A monopolist has zero profit.

e. A monopolist creates deadweight loss.

A. A competitive firm

  1. can consider only its location in setting the price.
  2. must base its competitive price on product differentiation.
  3. has the ability to set its own price.
  4. must accept the price determined by the intersection of the market supply and demand curves.
  5. has no supply curve.

B. If a firm is making an economic profit, then

  1. the factors of production are being paid their opportunity costs.
  2. there will be no change in the number of firms if the industry is perfectly competitive.
  3. the factors of production are being paid less than their opportunity costs.
  4. the factors of production are being paid more than their opportunity costs.
  5. the firm will exit the industry

C. Along a downward-sloping monopoly demand curve,

  1. marginal revenue is greater than price.
  2. the elasticity of demand is constant.
  3. marginal revenue decreases when the price decreases.
  4. marginal revenue is equal to zero when the price is equal to zero

D. If, in the short run, a perfectly competitive firm is producing at a point where the total cost is greater than total revenue, then the firm should

  1. shut down because economic profits are negative.
  2. continue to produce as long as P > AVC.
  3. continue to produce because accounting profits are positive.
  4. set a higher price for its output.
  5. set a lower price for its output

E. For a perfectly competitive firm, the demand curve is

  1. the marginal revenue curve.
  2. perfectly inelastic.
  3. always equal to marginal cost.
  4. the same as the market demand curve

F. A firm in a(n) industry will have the most elastic demand curve

  1. monopolistic
  2. oligopolistic
  3. monopolistically competitive
  4. perfectly competitive

G. If the demand curve of a monopolist is in the inelastic range, then

  1. total revenue will fall if the price increases.
  2. total revenue will be unchanged if the price increases.
  3. total revenue will rise if the price increases.
  4. the total supply will increase by an equal amount if demand increases.
  5. the price will be unchanged if total revenue increases

H. Monopolistic competition and oligopoly are examples of

  1. monopoly.
  2. perfect competition.
  3. theories of consumer behavior.
  4. imperfect competition.
  5. the extreme cases on the market structure continuum

I. Under which market structure do firms face the flattest (most elastic) demand curve?

  1. perfect competition
  2. monopolistic competition
  3. oligopoly
  4. monopoly

J. At the point of long-run equilibrium for a perfectly competitive firm,

  1. economic profits are zero.
  2. TR > TC.
  3. TR < TC.
  4. P = AVC.
  5. normal profits are zero.

26) Consider a perfectly competitive industry with long-run external diseconomies. When demand increases permanently, the equilibrium price A) falls and the equilibrium quantity decreases. B) rises and the equilibrium quantity remains the same. C) remains constant and the equilibrium quantity increases D) rises and the equilibrium quantity increases. E) remains constant and the equilibrium quantity decreases.

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