Decent Essays

. Amos McCoy is currently raising corn on his 100-acre farm and earning an accounting profit of $100 per acre. However, if he raised soybeans, he could earn $200 per acre. Is he currently earning an economic profit? Why or why not?

2. Determine whether each of the following is an explicit cost or an implicit cost:
a) Payments for labor purchased in the labor market
b) A firm’suse of a warehouse that it owns and could rent to another firm
c) The wages that owners could earn if they did not work for themselves

3. What are economies of scale? Please give an example. What are diseconomies of scale? Please give an example.

4. Your rich relative died and left you $100,000, which you decided to use for your own Internet business. …show more content…

20. (Perfect Competition and Efficiency) Define productive efficiency and allocative efficiency. What conditions must be met to achieve them?

21. (Barriers to Entry) Explain how economies of scale can be a barrier to entry.

22. (Allocative and Distributive Effects) Why is society worse off under monopoly than under perfect competition, even if both market structures face the same constant long-run average cost curve?

23. (Conditions for Price Discrimination) List three conditions that must be met for a monopolist to price discriminate successfully.
24. (Price Discrimination) Explain how it may be profitable for South Korean manufacturers to sell new autos at a lower price in the United States than in South Korea, even with transportation costs included
25. How did the De Beers cartel try to maintain control of the price in the diamond market? How was this control undermined? Briefly discuss.
26. Can the U.S. Postal Service be considered a monopoly in first-class mail? Why or why not? What has happened to the price elasticity of demand for first-class mail in recent years? Briefly discuss.
27. Explain why the marginal revenue curve for a monopolist lies below its demand curve, rather than coinciding with the demand curve, as is the case for a perfectly competitive firm. Is it ever possible for a monopolist’s marginal revenue curve to coincide with its demand curve?

28. Why would a monopoly firm never knowingly produce on

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