Economics: Private and Public Choice
16th Edition
ISBN: 9781337642224
Author: James D. Gwartney; Richard L. Stroup; Russell S. Sobel
Publisher: Cengage Learning US
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Chapter 24, Problem 3CQ
To determine
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What stops oligopolists from acting together as a monopolist and earning the highest possible level of profits?
What do economists mean when they say that competitive markets are more efficient than monopolistic markets?
Monopolistic markets result in lower price and higher production
Competitive markets result in lower prices, monopolistic market result in higher production
Competitive markets result in lower costs, lower prices, and higher levels of production
Easy entry and exit
Why don’t monopolists try to establish the highest price possible, as many people allege? What would happen to sales? To profits?
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Economics: Private and Public Choice
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- What stops oligopolists from acting together as a monopolist and earning the highest possible level of profits? Is there a way for oligopolists to attempt to cooperate and maximize profits? What are the risks of such attempts (and ultimately, generally cause such attempts to fail)?arrow_forwardIs monopolistic competition efficient and socially desirable for the welfare of the economyarrow_forwardif a product moves from being monopolistic to a monopoly will the demand for the industry decrease? For example if a specific shampoo was only needed once a month because of new ingredients, will the demand for that industry go down?arrow_forward
- for a monopolistic firm, its demands is p=200- 0.25Q while MR =200-0.5Q if its MC=20 how much it should produce to maximize its profit? for a monopolistic firm, its demands is p=200- 0.25Q while MR =200-0.5Q if its MC=20 how much the firm should charge? for a monopolistic firm, its demands is p=200- 0.25Q while MR =200-0.5Q if its MC=20 calculate its maximizing profitarrow_forwardMonopolistically competitive firms could increase the quantity they produce and potentially lower the average total cost of production. Why don't they do so?arrow_forwardDoes a monopolistic competitor produce too much or too little output compared to the most efficient level? What practical considerations make it difficult for policymakers to solve this problem?arrow_forward
- Does a monopolist have a supply curve? Explain your answer. What are the different types of price discrimination? Differentiate between an oligopoly and a monopolistic competition (i.e. number of firms and the degree of product differentiation). How are skilled and unskilled workers in an economy likely to be affected if the firms adopt skill-biased technologies?arrow_forwardSuppose that, due to a successful advertising campaign, a monopolistic competitor experiences an increase in demand for its product. How will that affect the price it charges and the quantity it supplies?arrow_forwardHow is the perceived demand curve for a monopolistically competitive firm different from the perceived demand curve for a monopoly or a perfectly competitive firm? Why?arrow_forward
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