QUESTION 25 A monopolistically competitive firm's marginal revenue curve is downward sloping and lies below the demand curve. does not exist because the firm is a "price maker." coincides with the demand curve and is parallel to the horizontal axis. is downward sloping and coincides with the demand curve. QUESTION 26 A purely competitive firm currently producing 30 units of output earns marginal revenues of $12 from each extra unit of output it sells. If it sells 30 units, then its total revenues would be $120. $240. $360. indeterminate based on the information given. QUESTION 27 An industry having a four-firm concentration ratio of 30 percent is monopolistically competitive. is an oligopoly. approximates pure competition. is a pure monopoly.
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The following graph describes the demand, marginal revenue, marginal cost, and average total cost curves that a monopolist faces. Use the graph to answer the questions below. 1. What will be the monopoly price, output, and profit for this firm? (3 points) 2. Shade the sections of the graph that represent the consumer surplus and producer surplus. (2 point) 3. If this industry were competitive and every firm had the same marginal costs shown in the picture, what would be the price, output and profit? (3 points) 4. Shade the section of the graph that represents the deadweight loss from the monopoly. (1 point)
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Problems and Applications Q7 Consider a monopolistically competitive market with N firms. Each firm's business opportunities are described by the following equations: Demand: Q = 100N - P Marginal Revenue: MR = 100N - 2Q Total Cost: TC = 50 + Q^2 Marginal Cost: MC = 2Q As N rises, the demand for each firm's product decreases. How many units does each firm produce? - 400N - 25N - 25 - 25N What price does each firm charge? - 125N - 75N - 75N - 100N How much profit does each firm make? - 50 + 625N^2 - 1,875N^2 - 2,500N^2 - 50 - 1,250N^2 - 50 In the long run, firms will exist in this market.
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1. A monopolist can produce at constant average and marginal costs of AC = MC = 5. The firm faces a market demand curve given by Q = 53 - P. The monopolist's marginal revenue curve is given by MR = 53 - 2Q. a. Calculate the profit-maximizing price-quantity combination for the monopolist. Also calculate the monopolist's profits and consumer surplus. b. What output level would be produced by this industry under perfect competition (where price ¼ marginal cost)? c. Calculate the consumer surplus obtained by consumers in part b. Show that this exceeds the sum of the monopolist's profits and consumer surplus received in part a. What is the value of the ''deadweight loss'' from monopolization?
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