ECON 260 22. Even though a monopolist can use the market demand for a specific q
ID: 1114616 • Letter: E
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ECON 260 22. Even though a monopolist can use the market demand for a specific quantity of output; however, in order to sell more of its product, a a lower its price. c. sell to the government, 23. Marginal revenue for a monopolist is computed revenue per one curve to determine the highest price consumers are willing and able to pay monopolist must b. use its market d. sell in international markets. power to force up the price of complementary products. as change in total revenue per one unit increase in quantity sold. Marginal b. neither competitive nor monopoly firms d. monopoly firms, but not for competitive firms. cue revenue can become for a both competitive and monopoly firms. c. competitive firms, but not for monopoly firms negative for st 24 What is the monopolists proft under the following conditions? The prol-maximizing price charged for goods produced is $12 on of the marginal revenue and marginal cost curves occurs where output is 10 units and marginal cost is S6. Average total cost for 10 units of output is $5. a. $60. b. $70. c. $100. d. $120 25. By definition, a contestable market is an imperfectly competitive situstion that is subject to entry. Even if there is only one producer of a particular good, the market may NOT be contestable because a. New technology can make the current good obsolete. b. New technology cannot make the current good obsolete. c. Domestic firms can potentially enter the market. d. Foreign producers of the good can provide the good to the U.S. market. 26. Private ownership of a monopoly may benefit society because the monopoly will have an incentive to a lower its costs to earm a higher profit b. price its good according to the intersection of marginal cost and average revenue. c. charge a price that prevents some people from buying. d. charge a price that is consistent with that of a benevolent social planner 27. Monopolistic competition is characterized by which of the following attributes? (0) Free entry; (ii) Produet differentiation; (ii) Mamy sellers a. () and (i) only. b. ) and (i) only. e.() and (iai) only. d. 0), (ii), and (ii) 28. When an industry has many firms, the industry is a an oligopoly if the firms sell differentiated products, but it is monopolistically competitive if the firms sell identical products. b. an oligopoly if the firms sell differentiated prodacts, but it is perfectly competisive if the firms sell identical products c. perfectly competitive if the firms sell differentiated prodacts, but it is monopelistically competitive if the firms sell identical d. monopolistically competitive if the firms sell differentiated products, but it is perfectly competitive ifthe firms sell products. perfect competition becaase in mosopolistically competitive markets each of the sellers 29. Monopolistic competition differs from different product. Moreover, a profit-maximizing firm in a monopolistically competitive market differs from a firm in a perfectly competitive mar a. make zero profit in long a ho c. is characterized by setting the price at PA7C ket because the firm in the monopolistically competitive market run. b. faces a horizontal demand curve at the market clearing price. d. has no barriers to entry. Figure#3:Explanation / Answer
22. a. lower price. This is because it faces a downward sloping demand curve.
23. d. The marginal revenue curve for the competitive firms is a horizontal line equal to demand only. And can never be negative. For Monoploist MR lies below Demand and can be negative.
24. b.
TC = AC*10 = 50
TR = P*10 = 120
Profit = 120-50 =$70
25. c. There is a potential number of firms that may enter the market
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