🏷️ LIMITED TIME OFFER: GET 20% OFF GRADE+ YEARLY SUBSCRIPTION →
Log in
HomeClass Notes1,200,000CA670,000

ECO101H1 Lecture Notes - Marginal Revenue, Demand Curve, Perfect Competition

79 views6 pages
chocolatewhale65
14 Apr 2014
School
UTSG
Department
Economics
Course
ECO101H1
Professor
James Pesando

For unlimited access to Class Notes, a Class+ subscription is required.

elizabethkandelaki and 40134 others unlocked
ECO101H1 Full Course Notes
98
ECO101H1 Full Course Notes
Verified Note
98 documents

Document Summary

90% of market for operating systems of personal computers <=> near monopoly x. Demand curve facing a monopolist vs demand curve facing a perfectly competitive firm. Monopolist: single seller of a product, no close substitutes. Downward sloping market demand curve is also the monopolist demand curve. To sell an additional unit of output, monopolist must lower price. Additional revenue(mr) is strictly less than the price. Perfectly competitive firm, so small to the market relative as a whole, can sell an additional unit of output at unchanged price. Marginal revenue is very different for monopolist and competitive firm. 1) mr where mr = mc. At q1, mr > mc => expand.

Get access

Grade+20% off
$8 USD/m$10 USD/m
Billed $96 USD annually
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
40 Verified Answers
Class+
$8 USD/m
Billed $96 USD annually
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
30 Verified Answers

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 Documents

ECO101H1 Lecture 16: Lecture 16-Monopoly
copperclam445
ECO101H1 Lecture Notes - Lecture 9: Monopoly Price, Profit Maximization, Marginal Revenue
redelephant995
ECO101H1 Lecture Notes - Lecture 8: Monopoly Profit, Monopoly Price, Organic Food
bluegrasshopper710

Related Questions

1. For a single-price monopoly, marginal revenue is

a. equal to the price for the first unit of output.

b. less than the price for all units of output after the first unit.

c. greater than price. horizontal.

d. a and b

 

 

2. The demand curve facing a monopolist is:

a) horizontal, the same as that facing a perfectly competitive firm.

b) upward sloping, the same as that facing a perfectly competitive firm.

c) downward sloping, unlike the horizontal demand curve facing a perfectly competitive firm.

d) downward sloping, the same as that facing a perfectly competitive firm.

1. Which of the following is true under a monopoly?

  • A. Monopolist chooses the highest possible price.
  • B. Monopolist chooses a price that is always higher than marginal cost of production.
  • C. Marginal revenue of a monopolist is price.
  • D. None of the above are true for monopoly.

2. You are the manager of a monopoly that faces a demand curve described by P = 230 -20Q. Your costs are C = 5 +30Q. The profit-maximizing output for your firm is:

  • A. 4
  • B. 5
  • C. 6
  • D. 7

3. Which of the following is true?

  • A. A monopolist produces on the inelastic portion of its demand.
  • B. A monopolist always earns an economic profit.
  • C. The more inelastic the demand, the closer marginal revenue is to price.
  • D. In the short run a monopoly will shutdown if P < AVC.

4. In a competitive industry with identical firms, long rum equilibrium is characterized by:

  • A. P = AC
  • B. P = MC
  • C. MR = MC
  • D. All of the above

5. You are the manager of a firm that sells its product in a competitive market at a price of $50. Your firm's cost function is C = 40 + 5Q2. Your firm's maximum profits are:

  • A. 125
  • B. 250
  • C. 100
  • D. 85

6. A perfectly competitive firm faces:

  • A. A perfectly elastic demand function
  • B. A perfectly inelastic demand function
  • C. a demand function with unitary elasticity
  • D. none of the above

6. Power Printers Total Costs (per hour)

q TC

0 65

1 80

2 95

3 120

4 150

5 200

If the price of a printer is $50 in this perfectly competitive industry, what is the profit-maximizing rate of output?

7. Which of the following is NOT true in a perfectly competitive market?

a. There is free entry and exit into the industry.

b. Each firm produces a differentiated product.

c. Each firm faces a perfectly elastic demand curve.

d. Price is equal to marginal revenue at every output level for the firm.

8. A perfectly competitive firm should always continue to operate in the short run as long as:

a. P < ATC at the rate of output where MR = MC.

b. P < AVC at the rate of output where MR = MC.

c. MR > AVC at the rate of output where MR = MC.

d. MR > AFC at the rate of output where MR = MC.

9. A firm that makes zero economic profits:

a. Must eventually go bankrupt.

b. Should shut down.

c. Incurs a loss, but should not shut down.

d. Covers all its costs, including a provision for normal profit.

10. A monopoly firm is different from a competitive firm in that:

A. There are many substitutes for the monopolist’s product whereas the competitive firm’s demand curve is perfectly elastic.

B. The monopolist’s demand curve is perfectly inelastic, whereas the competitive firm’s demand curve is perfectly elastic.

C. The monopolist can influence the price in the market, whereas the competitive firm is a price taker.

D. All of the above