Question

1. Which one of the following is the most accurate description of a monopolist? a sole producer of a narrowly defined product class, such as brown, Grade A eggs produced in Eagle County, Colorado A) B) a firm that is very large relative to all its competitors within a narrow product class C) a sole producer of a product for which good substitutes are lacking in a market with high barriers to entry a large, multinational firm that produces a single product in a narrow product class D) 2. Which of the following is not a barrier to entry? A) B) C) D) Ownership of the entire supply of an essential resource Large profits Patents Government licenses Use the following to answer question 3 Gizmo's Inc Price $24 $22 $20 $18 $16 $14 $12 $10 $8 S6 $4 uantitv 0 2 4 6 3. According to the table above, which shows the demand for Gizmo's widgets, what is the marginal revenue of the fourth widget? B) S16 C) $48 D) $10

Answer 1

1) A monopolist is a firm which is a sole producer of a given good for which no close substitutes exists in the market and there are high barriers to entry in the market.

Option(C)

2) Large profits are not a barrier to entry and barriers to entry are usually in the form of licenses,patents,copyrights, ownership of a key resource etc.

Option(B)

3) MR= Change in TR/change in Q

Change in TR = TR of 4th - TR of 3rd = (16*4) -(18*3) = 64-54 = 10

Option(D)