ECON 2000 Chapter : Ch 9 Extra Help

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azuremammoth471

15 Mar 2019

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It must lower its price on all of its units in order to sell any additional units. False: the monopolist"s marginal revenue is less the price for any output greater than one. True: a monopolist"s demand curve is the same as the market demand curve for the product. In the long run, a monopolist will experience only positive or zero economic profits. Is positive up to the rate of output that maximizes total revenue: suppose a monopoly firm produces tables and can sell 10 tables per month at a price of per table. In order to increase sales by one table per month, the monopolist must lower the price of its tables by to. The marginal revenue of the eleventh table is: : suppose a monopoly pharmaceutical company produces a drug and sells 100 prescriptions for each. In order to sell 101 prescriptions, the monopolist must lower the price to per prescription.

Related Questions

1. Which of the following is a difference between a perfectly competitive market and a monopoly?

A. There are huge barriers to entry in a perfectly competitive market, while there are no barriers to entry in a monopoly.

B. The market demand curve faced by a perfectly competitive firm is horizontal, while the market demand curve in a monopoly is downward-sloping.

C. The sellers in a perfectly competitive market are price-makers, while a seller in a monopoly market is a price-taker.

D. The equilibrium price in a perfectly competitive market exceeds marginal revenue, while the equilibrium price in a monopoly equals marginal revenue.

2. Which of the following firms is likely to have the highest market power?

A. An oligopoly with homogeneous products

B. A monopoly

C. A monopolistic competitor

D. A perfectly competitive firm

graygrasshopper945

Suppose a monopolist faces a demand curve for its output of P = 300âQ. This means that the marginal revenue curve of the monopolist is M R = 300 â 2Q. Assume that the marginal cost of production is constant and equal to $40.

a) Write down an expression for the monopolists profit, as a function of the quantity of output it produces.

b) If the monopolist must charge the same price for all units of output that it sells (that is, if the monopolist is a single price monopolist), what level of output will maximise the monopolists profit? What price will the monopolist charge? What is its level of profit?

c) If this were a competitive market instead of a monopoly, what level of output would be produced and what price would be charged? What is the level of profit for firms if it were perfectly competitive?

d) Draw a diagram of demand, marginal revenue, and marginal cost that illustrates your answer to part b). From this work out consumer surplus and producer surplus.

e) Draw the same diagram but for your answer to c), the case of the competitive market. From this work out consumer surplus and producer surplus. How much deadweight loss is there from the monopoly? Why?