Economic

7557 Words Sep 6th, 2014 31 Pages
CHAPTER 24
Pure Monopoly

A. Short-Answer, Essays, and Problems

1. What are the major characteristics of pure monopoly?

2. What are the major barriers to entry that explain the existence of monopoly?

3. What is the relationship between economies of scale and a natural monopoly?

4. Some economists argue that pure monopolists will purposely avoid the price-output combination that will maximize their profits. Explain how this less-than-maximum profit behavior could be rational.

5. In what ways, if any, do the demand schedules for a purely competitive firm and a pure monopolist differ? What significance does this have for the price-output behavior of each?

6. Why
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Explain. (b) What do the data in the table indicate about the elasticity of demand?

11. In the following table are demand and cost data for a pure monopolist. Complete the table by filling in the columns for total revenue, marginal revenue, and marginal cost. Answer these three questions: (a) What output will the monopolist produce? (b) What price will the monopolist charge? (c) What total profit will the monopolist receive at the profit-maximizing level of output?

Total Marginal Total Marginal Quantity Price revenue revenue cost cost 0 $34 $______ $ 20 1 32 ______ $______ 36 $______ 2 30 ______ ______ 46 ______ 3 28 ______ ______ 50 ______ 4 26 ______ ______ 54 ______ 5 24 ______ ______ 56 ______ 6 22 ______ ______ 64 ______ 7 20 ______ ______ 80 ______ 8 18 ______ ______ 100 ______ 9 16 ______ ______ 128 ______ 10 14 ______ ______ 160 ______

12. Why is there a

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