Principles of Microeconomics
1. What are the differences in the assumptions between the industrial organizations of perfect competition and monopoly?
2. What are the differences in the conclusions between the industrial organizations of perfect competition and monopoly?
3. Complete the chart below.
|
Q
|
FC
|
VC
|
TC
|
AFC
|
AVC
|
ATC
|
MC
|
|
0
|
12
|
0
|
12
|
n/a
|
n/a
|
n/a
|
n/a
|
|
1
|
|
4
|
|
|
|
|
|
|
2
|
|
9
|
|
|
|
|
|
|
3
|
|
15
|
|
|
|
|
|
|
4
|
|
22
|
|
|
|
|
|
|
5
|
|
30
|
|
|
|
|
|
|
6
|
|
39
|
|
|
|
|
|
|
7
|
|
49
|
|
|
|
|
|
|
8
|
|
60
|
|
|
|
|
|
|
9
|
|
72
|
|
|
|
|
|
|
10
|
|
85
|
|
|
|
|
|
|
11
|
|
99
|
|
|
|
|
|
|
12
|
|
114
|
|
|
|
|
|
|
13
|
|
130
|
|
|
|
|
|
|
14
|
|
147
|
|
|
|
|
|
4. Using your answers to problem #3, if the good that the firm makes sells for $14 in a competitive market, how many units will the firm make?
5. Based on your answers to problems #3 and 4, how much revenue will the firm make?
6. Based on your answers to problems #3 and 4, how much will that level of production cost the firm?
7. Based on your answers to problems #5 and 6, how much profit will the firm make?
8. Complete the table below for a monopolist concerning his revenues.
|
Q
|
P
|
TR
|
MR
|
|
0
|
78
|
|
n/a
|
|
1
|
74
|
|
|
|
2
|
70
|
|
|
|
3
|
66
|
|
|
|
4
|
62
|
|
|
|
5
|
58
|
|
|
|
6
|
54
|
|
|
|
7
|
50
|
|
|
|
8
|
46
|
|
|
|
9
|
42
|
|
|
|
10
|
38
|
|
|
|
11
|
34
|
|
|
|
12
|
30
|
|
|
|
13
|
26
|
|
|
|
14
|
22
|
|
|
|
15
|
18
|
|
|
9. Complete the table below for a monopolist concerning his costs.
|
Q
|
FC
|
VC
|
TC
|
MC
|
ATC
|
|
0
|
40
|
0
|
|
n/a
|
n/a
|
|
1
|
|
10
|
|
|
|
|
2
|
|
22
|
|
|
|
|
3
|
|
38
|
|
|
|
|
4
|
|
58
|
|
|
|
|
5
|
|
82
|
|
|
|
|
6
|
|
116
|
|
|
|
|
7
|
|
156
|
|
|
|
|
8
|
|
200
|
|
|
|
|
9
|
|
250
|
|
|
|
|
10
|
|
305
|
|
|
|
|
11
|
|
370
|
|
|
|
|
12
|
|
440
|
|
|
|
|
13
|
|
520
|
|
|
|
|
14
|
|
610
|
|
|
|
|
15
|
|
710
|
|
|
|
10. Given the information in your tables for problems #8 and 9, how much does the monopolist produce?
11. Given your answers to problems #8-10, how much revenue does the monopolist receive?
12. Given your answers to problems #8-10, what are the total costs that the monopolist has?
13. Given your answers to problems #11 and 12, what is the monopolist's profit?
14. Why would an increase in the demand curve benefit a monopolist?
15. List and very briefly explain the three types of barriers to entry that can cause a monopoly situation to arise.
16. Discriminating monopolists are able to charge different prices to different customers. In fact, a perfectly discriminating monopolist is able to charge each customer his exact (personal) reservation price for the item the monopolist sells. Explain why this would be beneficial for the monopolist in terms of his revenue and profit. A graph might help you. (Think about what this would mean for the monopolist's MR curve as you answer this question. Look back at the notes where we discussed the costs and benefits for a monopolist to raising price. What happens to the cost if he is perfectly discriminating?)