chapter 10 monopoly

Question 1

perfect competition demand curve

Answer 1

ONLY perfect competition firm has horizontal demand curve- P=MR=D

Question 2

demand curve for other firms (including monopoly)

Answer 2

downward demand curve separate from MR

Question 3

MR slope- how to determine

Answer 3

MR= change in TR over Q

also MR TWICE as steep as demand curve- easy to find,

Question 4

when is total profit max

Answer 4

MR=MC– firms under monopoly will operate to make max profit, they determine q produced and demand curve will determine market price

Question 5

info about monopoly graph

Answer 5

not productively (min ac) or allocatively (MC=P) efficient
since p above ac they make profit because TR greater than TC therefor economic profit is made

Question 6

what does monopoly do (how they charge/how much they produce)

Answer 6

over charge and under produce

Question 7

barriers to entry into market

Answer 7

legal- public franchise, license, patent, copyright

technical- sole ownership of resource

economic – EOS high output at low ac/unit other firms can’t compete (walmart)

Question 8

characteristics of monopoly

Answer 8

one seller
unique product
very difficult entry into market
substantial control over price