AREC 202 Lecture 23: AREC 202-chapter 13

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chocolatesheep405

16 Nov 2016

School

CSU

Department

Agriculture + Resrce Econ

Course

AREC 202

Professor

Stephan Kroll

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Document Summary

Tuesday, november 15, 2016 are products differentiated? no yes. The meaning of monopoly: a departure from perfect competition. A monopolist is a rm that is the only producer of a good that has no close substitutes. The ability of a monopolist to raise its price above the competitive level by reducing output is know as market power. Compared to perfect competition, a monopolist reduces output week 13 day 1. Why do monopolies exist: pro ts cannot persist in the long run unless there is a barrier to entry: Control of natural resources or inputs (for example, de beers) Comparing the demand curves of a perfect competitive producer and a monopolist. How a monopolist maximizes pro t: an increase in production by a monopolist has opposing effects on revenue: A quantity effect. one more unit sold, increasing total revenue by the price at which the unit is sold.

Related Questions

1. Which of the following is a characteristic of pure monopoly?

A. close substitute products

B. barriers to entry

C. the absence of market power

D. "price taking"

2. An example of a monopoly would be

A. one of many U.S. wheat farmers

B. one of the few U.S. automakers

C. AT&T cell phone service

D. the local water company

3. In which market structure do firms exist in very large numbers, each firm produces an identical product, and there is freedom of entry and exit?

A. monopoly

B. oligopoly

C. only perfect competition

D. only monopolistic competition

E. both perfect competition and monopolistic competition

4. Which of the following is the best example of a perfectly competitive market?

A. farming

B. diamonds

C. athletic shoes

D. soft drinks

E. electricity distribution

crimsonalligator541

1) A natural monopoly exists when:

a. A few firms collude to make one large firm

b. Firms enter the industry as a result of profit incentives

c. Economies of scale provide large cost advantages to having one firm produce the industry's output

d. Firms naturally maximize regardless of market structure

2) A(n) ____ is a single firm with ___, whereas a(n) ___ implies an industry with ____ firm(s) and ____ .

a. Monopoly; barriers to entry; oligopoly; few; no barriers to entry

b. Oligopoly; no barriers to entry; monopoly; many; easy entry and exit

c. Monopoly; barriers to entry; monopolistic competition; many; easy entry and exit

d. Monopolistic competitor; barriers to entry; monopoly; one; barriers to entry

3) In monopolistic competition:

a. Each firm produces a product identical to that of every other firm in the industry

b. Firms are aware of their strategic interdependence

c. Firms earn large economic profits in the long run

d. Firms earn zero economic profits in the long run

4) A monopolistically competitive industry, such as corn snack chips, and a perfectly competitive industry, like wheat farming, are alike in that:

a. There are many firms in each industry

b. Firms in both types of industries produce similar but not identical products

c. Barriers to entry in both industries are large

d. Firms in both types of industries produce identical products

byzantiumfish483

What are the characteristics of perfect competition? Why does this type of fast-food restaurant tend to display characteristics of perfect competition?

Imagine you are running a firm with the characteristics of a perfectly competitive firm. Describe how your firm would maximize its short-run profits.

Why might firms in perfect competition choose to be open on Monday, typically the slowest day of the week, when their revenues do not seem to be sufficient to warrant doing so?

What are the long-run benefits of running a firm in perfect competition?

Under what conditions would your value-menu fast-food restaurant decide to be open on Mondays, and when would it decide not to be open on Mondays? When is losing money on Mondays still a good business decision?

Explain how your experience as a manager would change if the value-menu fast-food restaurant you were in charge of operated under a different market structure?monopolistic competition, oligopoly, and monopoly. For example, in each case, how would you decide what price to charge? What would your profits look like? Would consumers be better off in terms of welfare, when you compare a firm in monopolistic competition, oligopoly, and monopoly to one in perfect competition?

Two sources in addition to your textbook are required for this paper.

AREC 202 Lecture 23: AREC 202-chapter 13

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