Monopoly & Oligopoly + Monopolistic Competition

he inverse demand curve the monopolist faces is
p = 100 − q
The monopolist’s cost curve is c(q) = 30 + 10q. What is the optimal
(profit-maximizing) quantity, price and profit?

• Q = 45, P = 55, Profit = 1955

• Q = 55, P = 45, Profit = 1955

• Q = 55, P = 55, Profit = 1055

• Q = 65, P = 55, Profit = 1955

A monopoly has an inverse demand curve given by
p = 16 − Q
and a constant marginal cost of $4. Calculate the deadweight loss if the
monopoly charges the profit-maximizing price.

• DWL = 6

• DWL = 18

• DWL = 67

• DWL = 8

When the marginal revenue is​ positive, demand is elastic.

• True

• False

When the total revenue is​ increasing, demand is elastic.

• True

• False

Which of the following total cost functions suggests the presence of a natural​ monopoly?

• TC​ = 50Q

• TC​ = 50​ + 20Q

• TC​ = 50​ +

  20Q^2

• All of the above functions suggest the presence of a natural monopoly.

Suppose firm 1 and firm 2 produces differentiated products, with demand
functions
p1 = 112 − q1 − 0.5q2
p2 = 100 − q2 − 0.5q1
Each firm has a marginal cost of production $1 (so cost function is
C (q) = q). Find the Cournot-Nash equilibrium

• q2 = 3 and q1 = 4

• q2 = 30 and q1 = 46

• q2 = 38 and q1 = 40

• q2 = 38 and q1 = 46

wo oligopolistic firms with marginal cost MC = 10 compete in a market
with inverse demand function p = 100 − q. If they form a cartel and
produce the quantity that maximizes total profit and split the production
equally, how many units would each firm produce?

• q = 20

• q = 22.5

• q = 45

A cartel is likely to fail​ if:

• market share and pricing data are readily available to firms in the industry.

• noncartel members can supply consumers with large quantities of the good.

• there are only a small number of firms that can punish cheaters.

Why does differentiating its product allow an oligopoly to charge a higher​ price?

When an oligopoly firm differentiates its​ product, it

• 
  reduces the average cost of production.

• 
  essentially gains the advantage of moving

  second

  in a sequential game.

• makes demand less elastic.

• prevents new firms from entering its industry.

In a monopolistically competitive​ market, firms face a​ downward-sloping demand curve because​ _____________. Monopolistically competitive firms earn​ ____________ profits.

• 
  they produce a differentiated​ good; positive economic

• They produce a differentiated​ good; zero economic

• They benefit from economies of​ scale; positive economic