Homework Answers
1.
a) The HHI index indicates the market concentration. HHI of 2500 or more is highly concentrated.
2. c) Statement 1 is false as perfect competition has no deadweight loss. Statement 2 is true as deadweight there is inefficiency in the market.
3) c) When the benefits are enjoyed by a third party.
4) a) Q2, P5.
Monopolist is a price Maker. He will determine the quantity of output that will maximize revenue. The monopolist faces a downward sloping demand curve because he can sell more if he lowers the price. The profit maximizing price and output is where marginal revenue equals marginal cost, then it is extended to the market demand curve to determine what market price corresponds to that quantity.
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a. Why is the demand curve for a monopolist downward-sloping,
while the demand curve for the perfectly competitive firm is
horizontal?
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transformed to a monopoly industry. What will happen to price,
output, consumer and producer surplus, and deadweight loss?
c. If the wireless phone industry is dominated by four large
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A market with a monopoly firm will have higher prices and less output than if the market were perfectly competitive. True False In monopolistically competitive markets, the firms sell identical products. True False For a monopolist, the marginal revenue (MR) curve is the same line as the demand (D) curve. True False If marginal revenue for the 5th unit of a good is negative, then total revenue must be falling. True False Collusion is most often found among firms in...
1. Answer the following questions:
a. Why is the demand curve for a monopolist downward-sloping,
while the demand curve for the perfectly competitive firm is
horizontal?
b. Suppose a perfectly competitive industry is suddenly
transformed to a monopoly industry. What will happen to price,
output, consumer and producer surplus, and deadweight loss?
c. If the wireless phone industry is dominated by four large
firms, each with 20% of market share, and 2 small firms, each with
10% market share, what...
In the long run, all of the firms in a perfectly competitive industry will: exit the industry if price is greater than average total cost. produce at an output level at which average total cost equals marginal cost. earn an economic profit greater than zero. O produce an output level at which price is greater than average total cost. Which statement about the differences between monopoly and perfect competition is INCORRECT? A monopoly will charge a higher price and produce...
4. For a monopoly firm, marginal revenue (MR) is price (greater/less) than 5. To maximize profits, a monopoly firm picks the quantity at which revenue average revenue) equals {marginal cost/average cost) (marginal (Game Theory/Consumer Theory) is a method for analyzing strategic behavior of oligopoly firms 7. The entry of the second firm under monopolistic competition structure of market shifts the demand curve of the first firm to the (right left). D Focus ch De 9 W 11. Firms in a...
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