EBK FOUNDATIONS OF ECONOMICS
8th Edition
ISBN: 8220103632225
Author: PARKIN
Publisher: PEARSON
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Question
Chapter 17, Problem 5MCQ
To determine
To Choose:
The correct option that represents the profit in a monopolistic firm in the long run.
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Imagine that in a certain industry (choose any) monopolistic competition is replaced by monopoly.
a. As a result of what can this happen? Describe a possible scenario.
b. Using demand, marginal cost, and marginal revenue graphs, show how this decrease in competition will change market prices. Make appropriate comments on the graphs, paying special attention to the direction of changes.
c. Describe what changes may occur in the methods of competition if the firm becomes a monopoly
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
Ron's Hamburger Place is the only restaurant in town, a monopoly
Price and cost (dollars per hamburger)
10.00
9.00
8.00
7.00
6.00
5.00
4.00
3.00
2.00
1.00
0
Price: $ [Select]
ATC: $ [Select]
10
Profit: $ [Select]
dan da
MR
MC
Alt Text: Ron's Hamburger Place
What is the profit maximizing output, price, and economic profit of Ron's Hamburgers, monopoly?
Quantity: [Select]
hamburgers per hour
ATC
20
30
40
50
Quantity (hamburgers per hour)
per hamburger
Chapter 17 Solutions
EBK FOUNDATIONS OF ECONOMICS
Ch. 17 - Prob. 1SPPACh. 17 - Prob. 2SPPACh. 17 - Prob. 3SPPACh. 17 - Prob. 4SPPACh. 17 - Prob. 5SPPACh. 17 - Prob. 6SPPACh. 17 - Prob. 7SPPACh. 17 - Prob. 8SPPACh. 17 - Prob. 9SPPACh. 17 - Prob. 10SPPA
Ch. 17 - Washtenaw Dairy in Ann Arbor, Michigan, sells 63...Ch. 17 - Prob. 2IAPACh. 17 - Prob. 3IAPACh. 17 - Prob. 4IAPACh. 17 - Prob. 5IAPACh. 17 - Use the following information to work Problems 5...Ch. 17 - Prob. 7IAPACh. 17 - Prob. 8IAPACh. 17 - Prob. 9IAPACh. 17 - Prob. 1MCQCh. 17 - Prob. 2MCQCh. 17 - Prob. 3MCQCh. 17 - Prob. 4MCQCh. 17 - Prob. 5MCQCh. 17 - Prob. 6MCQCh. 17 - Prob. 7MCQ
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Similar questions
- 3. The graph below shows a firm's demand, marginal revenue, and marginal cost curves. Find the profit-maximizing level of output and mark it q*. Find the price the firm should charge and mark it P*. P MC X D MR Quantity 4. The Whatsa Widget Company has a monopoly over the sale of widgets in a small midwestern town. The firm's demand, marginal revenue, marginal cost, and average cost curves are shown below. Find the firm's profit-maximizing level of output and the price the firm will charge. Is the firm earning a positive or a negative profit? Show the firm's profit (or loss) on the graph. P MC X MR D ATCarrow_forwardWhen a firm or business holds a patent and has no competition in manufacturing a good or providing a service, it is known as _____. a. a technological monopoly b. a natural monopoly c. monopolistic competition d. perfect competitionarrow_forwardOne difference between a competitive firm and a monopoly is that __________________. a. monopoly makes economic profits, but a competitive firm never makes economic profits b. a monopoly faces a downward sloping marginal revenue curve, whereas a competitive firm faces a horizontal marginal revenue curve c. the cost curves of a monopoly are always below those of a competitive firm d. a monopoly always has economies of scale, but a competitive firm always has diseconomies of scalearrow_forward
- c. Why the demand curve for a firm operating in monopolistic competition is more elastic compared to the firm operating as a monopoly.arrow_forwardThe major difference between monopolistic competition and monopoly is a. how the quantity of output is determined. b. only a monopoly can earn an abnormal profit in the long run. c. monopoly is a price taker, and a firm in monopolistic competition is a price maker d. only firms in monopolistic competition are protected by barriers to entryarrow_forwardWhich of these situations is likely to produce a monopoly market structure? Group of answer choices a. Patent b. New design c. Great advertising d. Could be either a patent, new design or great advertisingarrow_forward
- What does a firm that is a natural monopoly derive its market power from? Group of answer choices A. Control over a natural resource, like diamonds or crude oil B. Constantly increasing fixed costs C. Patents and other legal protections for innovative products D. Declining average cost for all levels of demandarrow_forwardThe graph shows the marginal cost curve, average total cost curve, demand curve, and marginal revenue curve of a firm in monopolistic competition. Draw a point at the firm's profit-maximizing output and price. Draw a shape to show the firm's economic profit or loss. Label it. In the short run, a firm in monopolistic competition A. incurs an economic loss B. makes its output and price decision just like a monopoly firm does OC. breaks even D. always makes an economic profit 0000 zes di 120- 110- 100 90- 80- 70- 60- 50- 40- 30- 20- 10- 0- Price and cost (dollars per printer) 0 MC 50 MR ATC 100 150 200 250 300 Quantity (printers per week) >>> Draw only the objects specified in the question. Darrow_forwardWhat is the difference between a supply curve in perfect competition and supply curve in Monopoly. What conditions must exist in order for a monopolist to achieve economic profits in the long run? Explain any 2 barriers to entry in Monopoly.arrow_forward
- How is monopolistic competition like monopoly, perfect competition and oligopoly? Give two examples of price discrimination. In each case, explain why the monopolist chooses to follow this business strategy Why does price equal marginal revenue for the perfectly competitive firm? What is the relationship to the demand curve for the firm?arrow_forwardHow is monopoly different from perfect competition?arrow_forwardDraw a monopolists demand curve, marginal revenue, and marginal cost curves. Identify the monopolists profit-maximizing output level. Now, think about a slightly higher level of output (sayQ0+1). According to the graph, is there any consumer willing to pay more than the marginal cost of that new level of output? If so, what does this mean?arrow_forward
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