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Monopoly 3921
78.
In many countries, the government chooses to "internalize" the monopoly by owning monopoly
providers of goods
and services. (In some cases these firms are "nationalized," and the
government actually buys or confiscates firms
that operate in monopoly markets). What would be
the advantages and disadvantages of such an approach to ensure
that the "best interest of society"
is promoted in these markets? Explain your answer.
79.
Why might economists prefer private ownership of monopolies over public ownership of
monopolies?
80.
One solution to the problems of marginal-cost pricing of a regulated natural monopolist is average
cost pricing. In this
model, the monopolist is allowed to price its production at average total cost.
How does average-cost pricing differ
from marginal-cost pricing? Does this solution maximize
social well-being?
Problems
1.
What are the three main sources of barriers to entry for monopolies?
2.
State two examples of government-created monopolies.
Monopoly 3923
3.
Comparing firms in perfectly competitive markets to monopoly firms, which charges higher prices?
4.
Comparing firms in perfectly competitive markets to monopoly firms, which produces more output?
5.
Comparing firms in perfectly competitive markets to monopoly firms, which charges a price equal
to marginal cost?
6.
Comparing firms in perfectly competitive markets to monopoly firms, which can earn economic
profits in the long
run?
7.
Comparing firms in perfectly competitive markets to monopoly firms, which results in a deadweight
loss?
Figure 15-22
8.
Refer to Figure 15-22. How much consumer surplus results if this single-price monopolist profit-
maximizes?
9.
Refer to Figure 15-22. How much profit will this monopolist earn if it charges each consumer
the same price?
10.
Refer to Figure 15-22. How much deadweight loss results if this single-price monopolist profit-
maximizes?
11.
Refer to Figure 15-22. If the monopolist uses perfect price discrimination, how much output
does the firm produce?
12.
Refer to Figure 15-22. If the monopolist uses perfect price discrimination, what price will it
charge?
13.
Refer to Figure 15-22. If the monopolist uses perfect price discrimination, how much profit
does the firm earn?
14.
Refer to Figure 15-22. If the monopolist uses perfect price discrimination, how much
deadweight loss results?
15.
Refer to Figure 15-22. Which is more efficient, single price profit maximization or perfect price
discrimination?
Figure 15-23
16.
Refer to Figure 15-23. What type of monopoly is shown in the figure?
17.
Refer to Figure 15-23. If the firm profit-maximizes, what amount of output will it produce?
18.
Refer to Figure 15-23. If the firm profit-maximizes, what price will it charge?
19.
Refer to Figure 15-23. If the firm profit-maximizes, how much profit will it earn?
20.
Refer to Figure 15-23. If a regulator requires the firm to charge a marginal cost price, what
price will the firm
charge?
21.
Refer to Figure 15-23. If a regulator requires the firm to charge a marginal cost price, what
quantity will the firm
produce?
22.
Refer to Figure 15-23. If a regulator requires the firm to charge a marginal cost price, what is
the amount of profit
or loss earned by the firm?
23.
Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what is
the amount of profit
or loss earned by the firm?
24.
Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what
price will the firm
charge?
25.
Refer to Figure 15-23. If a regulator requires the firm to charge an average cost price, what
quantity will the firm
produce?
26.
Microsoft’s government-granted exclusive right to make and sell the Windows operating system
is called a
27.
The fundamental cause of monopoly is
28.
In both perfectly competitive and monopoly markets, the price per unit of a good is equal to the
Table 15-22
Quantity
Price
10
$46
20
$42
30
$38
40
$34
50
$30
60
$26
70
$22
80
$18
90
$14
100
$10
29.
Refer to Table 15-22. The average revenue of the 50th unit of output is
30.
Refer to Table 15-22. The marginal revenue, when the quantity changes from 30 to 40 units, is
