1. List and give an example of the three sources of monopoly power.

2. Define a natural monopoly and explain why it is a "Club Good". Is there an incentive for a firm to attempt to compete with a club good (natural monopoly)?

3. Briefly compare a Monopoly and A Competitive Firms Profit Maximizing Rule of Output.

4. Why is the Monopolists Marginal Revenue Curve beneath the Demand Curve?

5. The graph below shows the short run cost curves for Single Price Monopoly. Complete the graph by finding the monopolist's profit maximizing output and price. Clearly label whether the firm's profit or loss. Be sure to note the ATC at the output you established since you will need it to calculate Total Costs.

Note: When calculating use the closest whole number. Then answer all of the questions based on the information from your graph. You may copy and past the graph and complete it by hand. Upload it as a jpeg with your assignment.

5.1 The single price monopoly would charge a price of $ ____________ and sell _________ units of output.

5.2 The firm's total revenue equals $ _________________ the firm's total cost equals $___________. The firm makes a profit (loss) _____________ of $ ________________.

5.3 If this were a highly competitive firm the output would be _________________ and the price would be _________.

5.4 On the above graph Shade in the Dead Weight Loss associated with the single price monopoly.

5.5 Explain what will happen in the long run to the firm and in the market and why.

6. Briefly explain why a single price monopoly is inefficient.

7. From an economic standpoint, is a monopoly who is engaging in perfect price discrimination monopolist inefficient? Make sure to discuss deadweight loss as part of your explanation.

8. Briefly explain if it is possible for a monopolist to make an economic loss.