Monopoly & Monopolistic Competition | Microeconomics | Trường Đại học Quốc tế, Đại học Quốc gia Thành phố Hồ Chí Minh

MONOPOLY Multiple Choice M1
A monopolist faces a demand curve that is b. Horizontal. c. Perfectly inelastic. d.
Very stable, not greatly affected by economic changes. e. Relatively elastic. M2
As a rule, the monopoly price will be a.
As high as the monopolist wants. . c. Greater than average revenue. d. Lower than marginal revenue. e.
Equal to long-run average cost. M4
Which of the following is not a barrier to entry? a. Control of resources. b. Economies of Scale. . d. Patents and Copyrights. e.
Answers a, b, c and d all are entry barriers. M5
Due to its market power, a monopolist can a.
Set both price and quantity for the product. . c.
Maximize profit by setting price equal to long-run cost. d.
Pass along all cost increases to buyers. e.
Answers c and d are both correct. M6
If the demand curve is downward sloping, the monopolist’s marginal revenue curve is a. Above the demand curve. b.
Always above its average cost curve. c. The same as the demand curve. d.
Always below the marginal cost curve. M7
A monopolist maximizes profits by producing at a price and output where a. P = MC. b. P = AC. d. AC is at a minimum. e.
Answers c and d are both correct. M8
The monopoly market structure leads to a.
Price that equals average cost. b.
Quick responses to economic change. c.
Price that equals minimum long-run average cost. . e.
Efficient levels of production. M9
Hypothetically, if all firms in a perfectly competitive industry were to merge and act as a single supplier, b.
Industry output would increase and price would decrease. c.
Both industry output and price would decrease. d.
Both industry output and price would increase. e. No change would occur.
M14 A natural monopoly may occur if b.
Marginal cost falls throughout a large range of production. c.
Average fixed cost falls throughout a large range of production. d.
Industry demand is very inelastic. e.
Marginal revenue exceeds marginal cost for a large range of production.
M17 The major difference between monopolistic competition and perfect competition is the a. Size of the typical firm. b.
Magnitude of long-run profits. c.
Cost structure of the typical firm. d.
Degree of product differentiation.
M18 In general, the greater the degree of product differentiation b.
The more elastic is the demand curve. c.
The smaller is the firm’s profit. d.
The more intense is competition. e.
The greater the chance of customers switching suppliers.
M19 In most cities, there are a large number of qualified physicians. Physician services are
personalized that is, people do not see all physicians as identical. Besides price, fac – tors
such as age, sex, location, and personality influence the choice of physician. Thus, the
market for physician services is best described as a. Perfectly competitive. b. An oligopoly. c. A regulated monopoly. . e.
A market marked by price discrimination. Short Problems and Questions S1
Determine the profit maximizing output and price of a monopoly, if market demand is
given by P = 6,000 - 10Q, and total cost is C = 500 + 5Q2. S2
List types of barriers to entry that may lead to monopoly. S5
Cartels are inherently unstable. Explain carefully why this is so. S6
Briefly discuss the characteristics of monopolistic competition that distinguish this type
of market structure from monopoly and perfect competition. S9
Explain why advertising may make sense in monopolistic competition but not in perfect competition.
Longer Problems and D scussion Qu i estions L7
In the U.S., the “business” of intercollegiate sports is controlled by the NCAA and
generates significant profits for that organization and its member universities. The NCAA
controls the number and terms of scholarships given to student athletes, the schedules of
regular season and tournament games, and negotiates the terms of TV and radio contracts
for major sports such as football and basketball.
In what ways does the NCAA act like a monopolist? Explain briefly. L8
In an editorial praising capitalism, The Economist wrote: “It is competition that delivers
choice, holds prices down, encourages invention and service, and (through all these
things) delivers economic growth.” What kind(s) of competition (market structures) does
the writer seem to be discussing?
L9. A monopolist has cost function as follow: TC ($) = 2Q2 + 4Q + 10 The market demand is P =100-Q
a) What is the price and quantity to maximize revenue
b) What is the price and quantity to maximize profit
c) If the government impose unit tax t = 5$/unit, how does the firm change price and quantity?
d) If the government impose unit lump sum tax T = 50$, how does the firm change price and quantity?