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5 Written questions

5 Matching questions

  1. When does a natural monopoly exist?
  2. A perfectly competive firm that is receiving a price of $5 and has a marginal cost of $6 should always
  3. In a perfectly competitive market where is equilibrium?
  4. What is the Optimal Output Rule in a perfectly competitive mkt.?
  5. WHo had/has a monopoly on diamonds?
  1. a Whne a large firm can produce a product at a lower per unit cost than can a smaller firm.
  2. b De Beers
  3. c Zero economic profits (normal rate of return) this is where MR=MC
  4. d MR=MC Profit is maximized by producing the quantity for which the marginal cost is equal to the marginal revenue
  5. e decrease output

5 Multiple choice questions

  1. Straight up from output to Demand curve. Draw a line to price and you have the profit maximizing price.
  2. Seperation of buyers into distinct classes (ex: elderly, children, business travelers, non-business travelers
  3. Yes
  4. This is True
  5. MR curve is always below the demand curve

5 True/False questions

  1. Where on a graph doe sa monoploly set price to maximize profit?Price minus ATC=profit per unit

          

  2. At what point is profit maximized in a monopoly?Price is set in elastic region at the price that the industry believes the customer is willing to pay...NOT where MR=MC which is where price is set in perfect competition.

          

  3. Why is allocative efficiency not achieved in a monopoly?Straight up from output to Demand curve. Draw a line to price and you have the profit maximizing price.

          

  4. In a monopoly what are the barriers to entry?AR/Average Revenue

          

  5. Natural monopolyAN industry inwhich economies of scale are so great that a single firm can produce the product at a lower average totalo cost then would be possible if more then one firm produced the product]