Homework Answers
1) A monopolistic market is one in which only one company can supply a particular product or service and there are no substitutes. This is mainly due to barriers to entry. Common examples are water, natural gas, telecommunications and electricity.
2) A monopolist’s MR(marginal revenue) is always less than or equal to the price of the good. MR is the amount of revenue received per additional unit of output.
It is given by:
MR(Q) = P(Q)×Q−P(Q−1)×(Q−1) < P(Q)×Q−P(Q)×(Q−1) = P(Q), since P(Q − 1) > P(Q).
Thus, the monopolist’s marginal cost curve lies below its demand curve
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1.1 Provide common examples of a monopolistic market? 1.2 Unlike in a competitive market, a monopolistic...
This homework assignment compares a competitive market with a monopolistic market. The market demand curve is...
This homework assignment compares a competitive market with a monopolistic market. The market demand curve is P 122-¼Q. For each firm, marginal oosts are 20 + qi50 and fixed costs are 1 00. We assume first that the market is competitive. Module 8explains the competitive pricing procedure. Wederive the long-run price from the firms' cost curve competitive firms price at long-run minimum average costs. Question: Why is this relation true? Answer: Decreasing marginal utility implies an upward sloping marginal cost...
3. Unlike a perfectly competitive firm, the monopolistic competitive firm is able to (a little) control...
3. Unlike a perfectly competitive firm, the monopolistic competitive firm is able to (a little) control price. Discuss, why, the position of the firm in the long run, is similar to that of a perfectly competitive one. 4. List the characteristics of a monopolistically competitive market structure. 5. Describe the firm's decision in choosing the profit maximizing or loss minimizing level of output. Illustrate.
1) List the five characteristics of monopolistic competitive market. 2) Explain the difference between a monopoly...
1) List the five characteristics of monopolistic competitive market. 2) Explain the difference between a monopoly and a monopolistic competitive market. 3) How are they similar, and how are they different? 4) Describe the demand curve facing a monopolistic competitive market and how it differs from that facing a firm in a purely competitive market. 5) How can a firm be able to sustain itself while differentiating itself from its competitors?
5. What firms in perfect competitive market and monopolistic competitive market have in common? How they...
5. What firms in perfect competitive market and monopolistic competitive market have in common? How they are different in the long run? Explain using appropriate graphs. 7. Earnings per share is calculated to le a) only for common shares. b) only for preferred shares. c) for common and preferred shares. d) only for bonds.
1. How do fims differentiate there products from closely related substitutes? 2. Under Monopolistic Competition: ex...
1. How do fims differentiate there products from closely related substitutes? 2. Under Monopolistic Competition: explain the firm's strategy in advertising to lower the elasticity of demand for its product. Illustrate below, the shape of the fim's demand curve before and after lowering the elasticity of demand. 3. Unlike a perfectly competitive fim, the monopolistic competitive firm is able to (a little) control price. Discuss, why, the position of the firm in the long run, is similar to that of...
Would the demand curve for a monopolistic competitor be more or less elastic than the demand...
Would the demand curve for a monopolistic competitor be more or less elastic than the demand curve for a monopolist? Justify your answer. What are the characteristics of a monopolistically competitive market? In what sense is there com- petition and in what sense is there monopoly in this type of market structure? What are three examples of monopolistically competitive markets? True, false or uncertain, and why? "Monopolistic competition is just another form of pure monopoly. True, false or uncertain, and...
1. How does the product in a monopolistic competition compare with the product in a competitive...
1. How does the product in a monopolistic competition compare with the product in a competitive market? 2. How does the seller’s demand curve in a monopolistic competition compare with the seller’s demand curve in competition? 3. Why will an monopolistic competitive firm only lose some of its customers, but not all when it raises its price? 4. What feature is the “hallmark” in monopolistic competition? 5. What short-run profit maximizing rule do monopolistic competitive firms follow? 6. If economic...
Which of the following is characteristic of a perfectly competitive firm's demand curve? it is a...
Which of the following is characteristic of a perfectly competitive firm's demand curve? it is a horizontal line drawn at the market price since the firm is a price taker it is perfectly inelastic since the firm is a price taker its marginal revenue is always greater than the price O it is the same as the entire market's demand curve since the firm is a price maker it is a horizontal line at the market price since the firm...
The demand curve for the output of a monopolistic firm is equal to: A. the marginal...
The demand curve for the output of a monopolistic firm is equal to: A. the marginal revenue curve for the product in question B. the demand curve for a firm in a perfectly competitive market. C. the market supply curve for the product in question. D. the market demand curve for the product in question.
2) Why is the firm’s demand curve flatter than the total market demand curve in monopolistic...
2) Why is the firm’s demand curve flatter than the total market demand curve in monopolistic competition? Suppose a monopolistically competitive firm is making a profit in the short run. What will happen to its demand curve in long run equilibrium ? What could this firm do to affect what happens to its demand curve? Explain in detail.
This homework assignment compares a competitive market with a monopolistic market. The market demand curve is P 122-¼Q. For each firm, marginal oosts are 20 + qi50 and fixed costs are 1 00. We assume first that the market is competitive. Module 8explains the competitive pricing procedure. Wederive the long-run price from the firms' cost curve competitive firms price at long-run minimum average costs. Question: Why is this relation true? Answer: Decreasing marginal utility implies an upward sloping marginal cost...
3. Unlike a perfectly competitive firm, the monopolistic competitive firm is able to (a little) control price. Discuss, why, the position of the firm in the long run, is similar to that of a perfectly competitive one. 4. List the characteristics of a monopolistically competitive market structure. 5. Describe the firm's decision in choosing the profit maximizing or loss minimizing level of output. Illustrate.
5. What firms in perfect competitive market and monopolistic competitive market have in common? How they are different in the long run? Explain using appropriate graphs. 7. Earnings per share is calculated to le a) only for common shares. b) only for preferred shares. c) for common and preferred shares. d) only for bonds.
1. How do fims differentiate there products from closely related substitutes? 2. Under Monopolistic Competition: explain the firm's strategy in advertising to lower the elasticity of demand for its product. Illustrate below, the shape of the fim's demand curve before and after lowering the elasticity of demand. 3. Unlike a perfectly competitive fim, the monopolistic competitive firm is able to (a little) control price. Discuss, why, the position of the firm in the long run, is similar to that of...
Would the demand curve for a monopolistic competitor be more or less elastic than the demand curve for a monopolist? Justify your answer. What are the characteristics of a monopolistically competitive market? In what sense is there com- petition and in what sense is there monopoly in this type of market structure? What are three examples of monopolistically competitive markets? True, false or uncertain, and why? "Monopolistic competition is just another form of pure monopoly. True, false or uncertain, and...
Which of the following is characteristic of a perfectly competitive firm's demand curve? it is a horizontal line drawn at the market price since the firm is a price taker it is perfectly inelastic since the firm is a price taker its marginal revenue is always greater than the price O it is the same as the entire market's demand curve since the firm is a price maker it is a horizontal line at the market price since the firm...
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