5 Written questions
5 Matching questions
- What are the two major public policies toward natural monopolies:
- In economies of scale why can't a new firm compete even if they try?
- Is a book publihers a perfectly competitive market?
- what are the characteristics of pure competition (perfect competition)?
- A perfectly competitive firm that is in long-run equilibrium will
- a large number of buyers and sellers, homogenous (standardized) product, no barriers to new firms entering mkt., firms are price takers and have a perfectly elastic demand.
- b not earn an economic profit but be allocatively efficient and productively efficient
- c public ownership or regulation
- d NO
- e Small industry can't afford the HUGE costs (for ex. electric plant) and if they could afford to build it they oculdn't afford to compete witht he already existing monopoly who could afford to greatly lower their price to compete.
5 Multiple choice questions
- By subtracting total cost from total revenue or (PxQ) - (ATCxQ)
- Straight up from output to Demand curve. Draw a line to price and you have the profit maximizing price.
- NO they do not
- the good is supplied by the government or by a firm owned by the government
- NO, because the monopoly will produce less so they can charge a higher price.
5 True/False questions
At what point on demand curve is Socially optimal price? → Where P exceeds ATC.
Does a monopoly set price to maximize profit? → Yes they do
In a perfectly competitive mkt. if TR<TC what is happening? → Company is generating economic losses
What laws make monopolys illegal? → Anti-Trust laws
Is a natural monopoly illegal? → Anti-Trust laws