DEC5114 Tutorial 11

In imperfectly competitive markets

• there is no competition in the markets.

• some competition may exist in the markets.

• some competition may exist but only on price and not in other ways.

• some competition may exist but only in other ways and not on price.

A monopoly is an industry with

• a single firm in which the entry of new firms is blocked.

• a small number of firms each large enough to impact the market price of its output.

• many firms each able to differentiate their product.

• many firms each too small to impact the market price of its output.

Monopolists differ from perfectly competitive firms

• on the cost and demand sides of the profit equation.

• on the cost side of the profit equation alone.

• on the demand side of the profit equation alone.

• on neither the cost nor demand sides of the profit equation.

In a monopoly, the market demand curve is

• the same as the demand curve facing the firm.

• the summation of all the individual firm's cost curves.

• nonexistent.

• the marginal cost curve above minimum average variable cost.

Refer to Figure 1. The marginal revenue of the fourth pound of cheese is

• $1.

• $3.

• $6.

• $24.

Refer to Figure 11.2. The profit-maximizing level of output for this monopolist is ________ units of output.

• 20

• 22

• 24

• 26

Refer to Figure 11.2. The profit-maximizing price for this firm is

• $5.

• $7.

• $9.

• $11.

Refer to Figure 11.2. If this firm is producing the profit-maximizing quantity and selling it at the profit-maximizing price, the firm's profit will be

• $0.

• $88.

• $154.

• $242.

Refer to Figure 11.2. The ________ level of output for this monopolist is 22 units of output.

• loss-minimizing

• profit-maximizing

• break-even

• shutdown

Price discrimination

• forces monopolies to charge a lower price as a result of government regulation.

• is an attempt by a monopoly to prevent some customers from purchasing its product by charging a high price.

• is an attempt by a monopoly to increases its profit by selling the same good to different customers at different prices.

• increases the consumer surplus associated with a monopolistic market.