1.8. In terms of market structures, the profit- maximising rule MR = MC is followed by A. both a monopolist and not a perfectly competitive firm. —— B. both a monopolist and a perfectly competitive firm. C. a perfectly competitive firm but not a monopoly.
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- Share Zoom DSlideshow 1 Oras E Edit Rotar 9. If a firm sells its output on a market that is characterized by a single seller and many buyers of a homogeneous product for which there are no close substitutes and barriers to long-run resource mobility, then the firm is: " O a. A monopolist b. An oligopolistic O c. A perfect competitor d. A monopolistic competitor3. How does quantity and price for a monopolist compare to quantity and price for a perfectly competitive firm?Which of the following is a characteristic shared by a perfectly competitive firm and a monopoly? Select one: a. Each must lower its price to sell more output. b. Each sets a price for its product that will maximise its revenue. c. Each maximises profits by producing a quantity for which marginal revenue equals marginal cost. d. Each maximises profits by producing a quantity for which price equals marginal cost. e. Each minimises average total cost by producing a quantity for which price equal average revenue
- 1) Are monopolists guaranteed of making economic profits?. pleas explain.2) Explain the long run equilibrium situation for a monopolistically competitive industry. Give two examples of industries that fit under this category.Exercise A.2. Point out the basic characteristics that define monopolistic competition and indicate the inefficiencies of this market structure.1. If the demand for a good increases at the same time as the supply of the same good decreases, what will happen to the equilibrium price and quantity of the good? Explain. 2. What is the deadweight loss of monopoly? Show the deadweight loss when the monopolist can perfectly price discriminate. 3. What is the point of long run equilibrium of a monopolistically competitive firm. How does it compare to a competitive firm.
- 7. Which of the following is a characteristic of both monopoly and monopolistic competition? Both market structures involve O no barriers to entry or exit. many buyers and sellers. product differentiation. zero economic profits in the long run.1. Describe the relationship between marginal cost and average cost. 2. Under what conditions should a competitive firm shut down in the short run? 3. How does the demand curve for monopolist firm differ from the demand curves for firms in competitive market structures?a. How is monopolistic competition like monopoly, perfect competition andoligopoly? b. Give two examples of price discrimination. In each case, explain why themonopolist chooses to follow this business strategy (answer b)c. Why does price equal marginal revenue for the perfectly competitive firm?What is the relationship to the demand curve for the firm?
- Q99 A major difference between monopoly and perfect competition is that... a. Monopolistic firms tend to maximise revenue while perfectly competitive firms maximise profit. b. Perfectly competitive firms cannot maintain positive economic profits in the long run, whereas monopolists can. c. Monopolistic firms emphasise cost minimisation whereas perfectly competitive firms emphasise profit maximisation. d. Monopolists do not consider consumer demand when choosing price and output levels. e. Perfectly competitive firms can never earn economic profits; monopolistic firms always earn economic profits.Question 1a. With the aid of a diagram explain how a monopolist determines how muchoutput to produce and what price to charge. [4 marks]b. Explain how the perfectly competitive firm decides whether to operate or shutdown in the short run. [4 marks]c. Explain why firms operating in monopolistically competitive markets probablywill not earn an economic profit in the long run. [4 marks]d. Why does interdependence of firms play a major role in oligopoly but not inperfect competition or monopolistic competition? [4 marks]The monopoly theory of profits argues that restricted entry into an industry tends to keep profits low. a. True b. False