5 Written questions
5 Matching questions
- If the monopolists reduces output, what will the price do?
- Why is allocative efficiency not achieved in a monopoly?
- What is the Optimal Output Rule in a perfectly competitive mkt.?
- WHo had/has a monopoly on diamonds?
- In a perfectly competitive mkt. a firm oculd be doing what in the shortrun?
- a earning profits, generating losses, breaking even.
- b MR=MC Profit is maximized by producing the quantity for which the marginal cost is equal to the marginal revenue
- c De Beers
- d P(what product is worth to consumers) > MC (what the resources used to make the product are worth)
- e The price will rise.
5 Multiple choice questions
- An exclusive right of inventors to produce and sell a new product or machine for 20 years from the time of application
- Yes they do
- 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.
- It is at the point where marginal revenue equals marginal cost (MR=MC) pg. 208)
- It is above the MR curve and is the SAME as the demand curve because the firm and the industry are one.
5 True/False questions
What happens to price in the longrun if firms are making economic losses in a perfectly competitive mkt.? → Normal rate of return
Are coupons price discriminators? → Above MC yet in the elastic region
WHY do costs differ between perfect competion industry and monpoly industry? → P x Q
Natural monopoly → AN 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]
Are monopolys efficient? → Ability to control output nad price