A..

1) As new firms enter a monopolistically competitive industry, it can be expected that:

a.Profits of existing firms will fall.

b.Market price will rise.

c.Market demand will rise.

d.The profits of existing firms will rise.

e.The output of existing firms will rise.

2) A monopoly:

a.Can force consumers to purchase what it is selling.

b.Always makes a profit.

c.Always has government-created barriers

d.Is characterized by a single seller who produces a well-defined product for which there are no good substitutes.

e.Always has naturally created barriers.

3)Deadweight loss results in a monopoly because:

a.The monopolist charges a price equal to marginal cost, which is higher than the price charged in a competitive market.

b.The monopolist charges a price below marginal cost.

c.Some consumers who would benefit from a competitive market lose out.

d.The monopolist produces a quantity that is higher than the quantity produced in a competitive market.

e.The monopolist makes a positive economic profit in the short run.

4)Firms engage in price discrimination if they:

a.Charge different prices for the same good based on race.

b.Never reveal their pricing plan to ineligible customers.

c.Charge the same prices to all.

d.Charge different prices for the same good based on tastes.

e.Charge different prices for the same good based on the costs associated with producing the good.

5)Because the demand curve for a monopolist is downward sloping:

a.There is no limit on the monopolist's ability to make a profit.

b.The monopolist can sell as many units of its product as it wants.

c.The monopolist can sell its product at any price it wants.

d.The monopolist is a price-taker.

e.The monopolist has many price-output combinations.

6)A monopolistically competitive market consists of many sellers, an oligopoly consists of ______ seller(s), and a monopoly consists of ______ seller(s).

a.A few; many

b.One; two

c.One; one

d.A few; one

e.Many; one

7)In a price discrimination setting, people with the most inelastic demand:

a.Do not buy the good.

b.Pay either a higher or lower price.

c.Pay the same price as everybody else.

d.Pay the highest price for the same good.

e.Pay the lowest price for the same good.

8)Suppose you live in a small college town where, every weekend, ten independent food-cart owners set up shop and sell hot dogs on the street, they are popular with students, and where they frequently locate where students hang out. Suppose on evening you overhear the conversation of three of the food-cart owners as they conspire to raise the price of their hot dogs. The same night, you report the conversation to the Department of Justice via their antitrust complaint website. Why might the Department of Justice not end an agent to investigate the collusion attempt you witnessed?

a.Collusion among small competitors like street vendors is actually beneficial to consumers.

b.Antitrust laws are applicable only to collusion attempts that occur on federal government property and the collusion attempt occurred on private property

c.The Department of Justice lacks the resources to investigate every case of the collusion report.

d.To ensure small businesses a fair shot at competing with larger businesses, President Obama issued an official executive order to the Department of Justice in 2012 to stop pursing antitrust violations involving small businesses only.

e.There is not a law that prohibits collusion among competitors.

9)Firms in a monopolistically competitive industry produce:

a.Only industrial products-and no consumer products

b.Homogeneous goods and services.

c.Differentiated products.

d.Only consumer products-and no industrial products.

e.Monopolistic goods only.

10) A big difference between a competitive firm and a monopolist is that a monopolist:

a.Can always make positive economic profits.

b.Does not set marginal revenue equal to marginal cost to maximize profits.

c.Does not try to maximize profits.

d.Does not charge a price equal to marginal revenue.

e.Cannot set its price at the market price.

B..

1.Please list and discuss in detail the six forces that determine whether a Demand curve is price elastic, or price inelastic. What does it mean for a Demand curve to be price elastic, exactly? What happens when the sellers raise the price of a product by ten percent on a demand curve that is price elastic?

2. Please list and describe a product or a service that is new and original--- not discussed in the Lectures or videos, and not eyeglasses. Is the demand for your product or service price elastic? Or price inelastic? Why? How do the six forces discussed in your answer to question #1 apply to the product or service that you have chosen to discuss? In your example, what would happen if the seller or sellers raised the price of this product or service by 10%? Why?

3. In theory, what are the four actions a seller or seller could take in order to attempt to raise profits, as discussed in the Lectures? If the seller or sellers of the product or service you have chosen to discuss in question #2 wished to raise profits, what actions could they take? Why?

This Is Answer number 1

Factors affecting price elasticity of a demand curve: the price of the good Availability of substitute good. Habits Type of good Urgency of consumption Time period ?Price of good : the most common factor which determines whether a demand curve of a given good is elastic or not is price. When price changes and the change in quantity demanded is less than it, this shows that the demand curve is inelastic. Elastic demand curve has a higher change in quantity demanded with respect to change in price. Availability of substitute goods: substitute goods are those goods which can be interchangeably used with it's corresponding good for instance petrol and diesel, tea and coffee etc. When there are more substitute good for a commodity , it's demand curve will have higher elasticity compared to good with few substitute. Let's say a person is fond of eating fruits. The price of apple rises to $1/ kg and the person decrease the demand for apples from 10kg to 2 kg and switchs to pear . This shows that change in price is causing change more change in quantity demanded . Thus here price elasticity of demand curve for apple will be elastic. Now assume that the price of salt rises. A rise in price of salt will cause a minor or nearly no change in its quantity demanded because we don't have a substitute for salt. Thus, demand curve of salt will be inelastic. Habits: consumption habits of a person also determines the elasticity of the good consumed by him. The good for which consumer is habitual will be inelastic as compared to the good for which consumer is not habitual. Suppose X is addicted to smoking. A rise in price of cigarettes occur. This will not have a great impact on quantity demanded of cigarettes by X because X is habitual to it. Thus, here the demand curve for cigarette will be inelastic. If price of hair oil rises X will demand less of it because he's nit habitual to have hair massages. Thus, demand curve fir hair oil will be elastic. Type of good : elasticity of a good depends upon its type lso. A luxurious good will be elastic as compared to necessity goods. A rise in price of automobile will reduce it's demand as X would not be able to buy it. Thus, the demand curve for automobile being a luxury good is elastic. While on the other hand if the price of a medicine rises( which is a necessity of X as he's a patient) the there will be no change or may be a slight change lower than change in price will occur. This will give an inelastic demand curve for medicine here. Urgency of consumption: when the consumption of certain good is very urgent then it's demand curve will be inelastic because a change in price will not affect it's consumption as it's urgent. And the good which is not urgent will have an elastic demand curve in comparison to urgent good. Suppose it's raining heavily and X needs an umbrella. The shopkeeper raises the price of umbrella . Here, X will buy umbrella no matter what the price is as he needs its urgently. Here umbrella will have an inelastic demand curve for X. Time period: When a consumer has short span of time , the price elasticity of a good us high and when he has long span of time then price elasticity will be low. This happens because consumer get time to think of other choices as per price rise . During short time, he doesn't have time to think of other choices and due to which often slight changes occur while during long time other choices can be worked out changing consumer preferences. For a demand curve to be price elastic means that the change in quantity demanded for the good is more than the change in price of the commodity. When the seller raises the price of a good by 10% that is price elastic then the quantity demanded of that good will increase by more than 10% because elastic good means that change in quantity demanded is more than change in price.

C..

Give correct answers with a good explanation

48) In Table 9-2, if the price is $11, a perfectly competitive firm seeking maximum profit should produce A) 109 units. B) 110 units. C) 107 units. D) between 103 and 104 units. 49) If a firm shuts down it experiences losses equal to A) total marginal costs. B) total fixed costs. C) total variable costs. D) zero. 50) For a monopoly firm, marginal revenue is A) greater than price. B) equal to price. C) less than average revenue. Dj not relevant in the firm's pricing. 51) Which of the following is a necessary condition for a firm to find price discrimination profitable? A) The firm must be a price-taker. B) Buyers in different markets must have the same clasticities of demand. C) Resale of the product must be preventable. D) The firm's marginal cost curve must be declining. 52) If AVC is $6 and P= MC, a firm in a perfectly competitive industry A) should shut down if price is less than $6. B) is experiencing economies of scale. C) will have positive economic profits if price is greater than $6. D) is producing too little output.AFC 135 105 50 100 1.20 140 Quantity 37) In Figure 9-6, a profit-maximizing firm would produce what quantity ? A) 140 B) 86 C) 120 D) 100 38) Which of the following statements is TRUE? A) Monopolists charges lower prices for their products than would be changed if the same market were perfectly competitive. B) When both the competitive industry and the monopolist face the same production cost and level of technology, the monopolist offers a higher level of output for sale. C) Both monopolies and perfectly competitive firms charge the highest price possible for the quantities of the products they sell D) Society's overall well-being is enhanced when a competitive industry is monopolized. 39) A monopolist's marginal revenue is A) a horizontal line at the market price. B) the same as a competitive firm's marginal revenue curve. () higher than the monopolist's demand curve. Dj lower than its selling price. 40) An increase in the productivity of labour would cause A) the market price to increase in a competitive industry. B) quantity supplied by each firm in a competitive industry to decrease. C) supply in a competitive industry to increase. D) the firm's supply curve to shift, but has no effect on the industry supply curve. 41) Market failure is a situation in which A) there is not free entry or exit into an industry. B) consumers are paying high prices and firms are making high profits. C) resources are being efficiently allocated, but some companies are being forced to shut dow D) in market equilibrium, too many or too few resources are used in producing the good or service. 42) What is the shape of the long-run industry supply curve in a decreasing cost industry? A) horizontal B) increasing C) upward sloping D) downward sloping A-9A) shows that the individual firm can increase sales by lowering the price of output. 43) A perfectly elastic demand function Bj occurs because a perfectly competitive firm can sell all it wishes at the market price, () has a marginal revenue which is always decreasing. DJ shows that a consumer is willing to pay any amount for the product. Table 9-1 Output Total Cost Output Total Cost $527 100 $500 101 501 107 556 102 504 103 506 109 SAD 104 510 110 615 105 518 111 44) Table 9-1 shows the total cost function for a firm operating in a perfectly competitive market. If the market price is $10, then a profit maximizing firm would produce A) 104 units. B) 110 units. C) 109 units. D) 106 units 45) Assume that a firm in a perfectly competitive industry faces the following cost and revenue conditions: ATC -$6; AVC - $3; MR - MC = $5. The firm is A) experiencing economic losses. B) experiencing zero profits. ( earning economic profits, DJ in a position in which it should shut down. 46) In a perfectly competitive market, demand and supply curves intersect at a price of 58. From this we know that, in equilibrium A) the firm is making a positive economic profit at a price of $8 or more. B) the average total cost of producing the good is $8. C) the marginal cost of producing the good is $8. Dj the average variable cost of producing the good is $8. Table 9-2 Output Total Costs Output Total Costs 100 5400 106 101 $427 402 107 102 435 405 108 103 409 445 104 109 414 454 105 110 420 466 111 480 47) In Table 9-2, if price is initially $3.50 and then increases to $7.95, a perfect competitor will A) increase output by 10 units. C) increase output by 4 units. B) increase output by 5 units. D) increase output by 8 units