Exam 11: Price and Output in Monopoly, Monopolistic Competition, and Perfect Competition

Costume jewelry is produced in a monopolistically competitive market. One producer produces 700 necklaces and at that output level, MR = MC = $3. We know then that

Ed Van Zaig is considering opening a sushi bar. To do so, he would have to quit his current job, which pays $20,000 a year, and use a building that he owns and currently rents to his brother for $6,000 a year. His costs at the sushi bar would be $50,000 for foodand $2,000 for gas and electricity. What are his explicit costs?

In an added perspective, we learn that Elaine Rodier gave up a job as a nursery school teacher to make appetizers. In doing this, she incurs a(n)

You developed a new technology for weather stripping windows. Your monopoly in this market turns out to be lucrative. Your total revenue was $75,000 and your total cost-explicit and implicit costs combined-was $25,000. The $50,000 difference representsyour

The monopolist's marginal revenue curve lies below the demand curve because

Due to small profit margins in perfect competition, it is argued that technological development may happen to a greater extent under oligopoly.

Which of the following statements is true?

Suppose hammers are produced in a perfectly competitive market. Ace Manufacturing is currently producing 1,000 hammers. It estimates that the marginal revenue of selling another hammer is $15, the marginal cost is $17, and the average total cost is $13. Fromthese figures, an economic consultant would conclude that Ace

The total revenue is the

According to economists, although a monopoly's price will be higher than a perfectly competitive firm's price when both produce the same good, the monopoly produces the good more efficiently.

According to Schumpeter, why don't competitive firms innovate?

-Maxine's electrotranslucent circuit board, a newly patented product, has been making her firm (ECB, Inc.) a bundle of money since being introduced to the market 6 months ago.Referring to Exhibit K-3 (on the following page),

In competitive industries, firms that innovate can expect to make no profit in the short run.

Ed Van Zaig is considering opening a sushi bar. To do so, he would have to quit his current job, which pays $20,000 a year, and take over a store building he owns and currently rents for $6,000 a year. His costs at the sushi bar would be $50,000 for foodand $2,000 for gas and electricity. What is the minimum revenue he must earn per year in order for it to be worth his while to open his sushi bar?

-The monopoly's profit in Exhibit K-8 is

-Ralph's "Roll Free Rolling Pin" factory used to be the only business of its type but now faces many competitors in its market, each having a similar but differentiated product. Which of the panels in Exhibit K-4 is the most appropriate representation of Ralph's long-run situation producing "q" units of output?

Graphically, to find the profit-maximizing price for a monopoly, find the output level where MR = MC and draw a line from that output level vertically to the demand curve.

As more firms enter a perfectly competitive industry, the industry supply curve shifts

When economists compare monopoly to the monopolistic competitive market, they show that the latter generates

In the long run, the economic profit earned by Hoot's Pump Chicken 'n' Ribs, a monopolistic competitor, is