Word Bank 1 A 21 economic profits 41 output 2 B 22 efficiencies 42 over allocati
ID: 1227081 • Letter: W
Question
Word Bank
1
A
21
economic profits
41
output
2
B
22
efficiencies
42
over allocation
3
K
23
government regulation
43
patents
4
L
24
higher
44
price
5
M
25
licenses
45
price discrimination
6
N
26
losses
46
pure
7
X
27
lower
47
pure competition
8
Y
28
maker
48
purely competitive
9
Z
29
marginal
49
rare
10
anti-trust
30
marginal cost
50
regulation
11
average revenue
31
marginal revenue
51
resell
12
average
32
maximizing
52
scale
13
average fixed cost
33
microeconomics
53
segment
14
average total cost
34
minimizing
54
setter
15
average variable cost
35
monopoly (ies)
55
surplus
16
barriers
36
more
56
taker
17
common
37
MR
57
total revenue
18
competitors
38
natural
58
total cost
19
costs
39
near
59
trade
20
demand
40
normal
60
under allocation
QUESTION 1
1. Fill in all blanks with the numbers from the Resource Sheet, not the actual words.
Refer to Graph 1 on the Resource Sheet. Line A represents both the BLANK curve and the BLANK curve. Line B represents the BLANK curve. At equilibrium, this monopolist will produce (X, Y or Z -- fill in number from word bank, not letter) BLANK units of output and will charge a price of (K-N -- fill in number from word bank, not letter) BLANK . If this market were purely competitive, the equilibrium price charged for this item would be (higher/lower -- fill in number from word bank) BLANK and (more/less -- fill in number from word bank) BLANK units would be produced. In this picture, the distance hi represents BLANK and the distance gh represents per unit BLANK
QUESTION 5
1. The problem with monopoly is that there are no internal forces, as there are in perfectly competitive industries, that will bring about the BLANK price (where P = BLANK in equilibrium), or the BLANK price (where BLANK = ATC in equilibrium). In some cases, subjecting the monopolist to BLANK can bring about a result that is superior to the free market outcome.
QUESTION 6
1. The "Dilemma of BLANK " refers to the problem that the government has in determining the appropriate product BLANK for a regulated BLANK . When the price is set to achieve the most efficient allocation of resources, the firm will often suffer economic BLANK . However, price that will cover its cost will only partially resolve the BLANK of resources that is inherent in unregulated monopoly. Also, such a pricing policy could lead to the problem of BLANK inefficiency.
Word Bank
1
A
21
economic profits
41
output
2
B
22
efficiencies
42
over allocation
3
K
23
government regulation
43
patents
4
L
24
higher
44
price
5
M
25
licenses
45
price discrimination
6
N
26
losses
46
pure
7
X
27
lower
47
pure competition
8
Y
28
maker
48
purely competitive
9
Z
29
marginal
49
rare
10
anti-trust
30
marginal cost
50
regulation
11
average revenue
31
marginal revenue
51
resell
12
average
32
maximizing
52
scale
13
average fixed cost
33
microeconomics
53
segment
14
average total cost
34
minimizing
54
setter
15
average variable cost
35
monopoly (ies)
55
surplus
16
barriers
36
more
56
taker
17
common
37
MR
57
total revenue
18
competitors
38
natural
58
total cost
19
costs
39
near
59
trade
20
demand
40
normal
60
under allocation
Explanation / Answer
QUESTION 1
Refer to Graph 1 on the Resource Sheet. Line A represents both the 11 curve and the 20 curve. Line B represents the 37 curve. At equilibrium, this monopolist will produce 7 units of output and will charge a price of 3 . If this market were purely competitive, the equilibrium price charged for this item would be 27 and 36 units would be produced. In this picture, the distance hi represents 13 and the distance gh represents per unit 21.
QUESTION 5
1. The problem with monopoly is that there are no internal forces, as there are in perfectly competitive industries, that will bring about the 35 price (where P = BLANK in equilibrium), or the 48 price (where BLANK = ATC in equilibrium). In some cases, subjecting the monopolist to 45 can bring about a result that is superior to the free market outcome.
QUESTION 6
1. The "Dilemma of 50 " refers to the problem that the government has in determining the appropriate product 44 for a regulated 35 . When the price is set to achieve the most efficient allocation of resources, the firm will often suffer economic 26 . However, price that will cover its cost will only partially resolve the 60 of resources that is inherent in unregulated monopoly. Also, such a pricing policy could lead to the problem of 59 inefficiency.
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