Long run cost conditions in an industry.

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Chapter 24, Problem 15CQ

To determine

Long run cost conditions in an industry.

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Question: answer the images in a short run monopolist will shut down when? a natural monoploy is most likely to occur in the market when?

Which of the following statements about a monopoly is true? (a) The monopolist has a flat demand curve because of high barriers to entry. (b) For a monopolistic firm, profit will be maximised where price = marginal revenue. (c) In the long run, a monopolist can earn only normal profits. (d) Price, in the long run, is not usually equal to the minimum average total cost.

Critically evaluate and explain each statement a. Because they can control product price, monopolists are always assured of profitable production by simply charging the highest price consumers will pay. b. The pure monopolist seeks the output that will yield the greatest per-unit profit. c. An excess of price over marginal cost is the market’s way of signaling the need for more production of a good. d. The more profitable a firm, the greater its monopoly power. e. The monopolist has a pricing policy; the competitive producer does not. f. With respect to resource allocation, the interests of the seller and of society coincide in a purely competitive market but conflict in a monopolized market.