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Exam 11: Monopoly

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Question 71

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Inefficient resource allocation is a major problem with monopolies.

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Question 72

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Describe the types of entry barriers which can exist and their importance to the study of monopoly.

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There are seven types of barriers discus...

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Question 73

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Why is the advent of monopoly likely to shift cost curves?

Figure 11-9 -In Figure 11-9,how much more than the short-run competitive price will the profit-maximizing monopolist charge?

Figure 11-4 -Since the Red Cross supplies 95 percent of the blood in the United States,it can be considered a monopolist.Assume that it,in fact,operates like a monopolist.The Red Cross currently charges hospitals and other users $21 for a pint of blood.In order to increase the supply of blood,the government offers the Red Cross a $10 million,lump-sum subsidy.How much more blood supply will the subsidy generate?

Price discrimination leads to higher prices for all consumers.

At his profit-maximizing level of output,a monopolist's average total cost curve is tangent to his demand curve.The monopolist

Explain how each of the following industries practices price discrimination: a.movie theaters b.airlines c.auto dealers d.U.S. Postal Service

A market structure in which only one firm has survived because of its economies of scale is called a

Monopolies are always large firms with great economies of scale.

Suppose a monopolist can charge different prices to different customers,such as doctors charging different prices depending on whether the patient is insured.How will profits and marginal revenue of such a price-discriminating monopolist compare to profits and MR of an ordinary monopolist who must charge all patients the same fee?

If the government charged a tax on monopolists equal to,say,75 percent of their economic profits,what would happen to the level of output the firm would produce? What about the price? Explain.

Is the monopolist supply decision more complicated than that of competitive supply?

"Intel Inside" accompanies virtually all IBM-compatible computers.Intel manufactures the Celeron and Pentium chips that are a key component of personal computers.Does Intel have a monopoly?

It is possible that if a monopoly is broken up,the cost of production for that product could increase.

At a given output level,a monopolist earns a profit only if the

Price discrimination allows a monopolist to make higher profits.

Figure 11-5 -Crown Theater is the only movie theater in the city.Its cost and revenue curves are shown in Figure 11-5.Monopolist Crown Theater would set the price of its tickets at

For a monopoly,MC = MR < P so that MC < MU.

Pure monopoly