Can someone please help me answer questions #7 & problem #3. Also, chapter9: questions 1,2, 6,& 10.Thank you so much!

7) Critically evaluate and explain each statement:

a. Because they can control product price, monopolists are always assured of profitable production by simply charging the highest price consumers will pay.

b. The pure monopolist seeks the output that will yield the greatest per-unit profit.

c. An excess of price over marginal cost is the market's way of signaling the need for more production of a good.

d. The more profitable a firm, the greater its monopoly power.

e. The monopolist has a pricing policy; the competitive producer does not.

f. With respect to resource allocation, the interests of the seller and of society coincide in a purely competitive market but conflict in a monopolized market.

Problem #3:

4. Assume that the cost data in the table below are for a purely competitive producer: (LO3) Average Average Average Total Fixed Variable Total Marginal Product Cost Cost Caost Cost 0 1 60.00 54300 510500 Ha 2 30.00 42.50 7250 i 3 20,00 AD0D &0.00 & 4 15.00 3750 5250 _30 5 1200 37.00 4%.00 2 & 10.00 3750 4750 ol o 857 3857 47.14 45 8 750 4063 4813 B 9 667 4333 5000 - 10 600 4650 5250 i a. Ata product price of $56, will this firm produce in the short run? If it is preferable to produce, what will be the profit-maximizing or loss-minimizing output? What economic profit or loss will the firm realize per unit of output? b. Answer the questions in part & assuming product price is $41. c. Answer the questions in part & assuming product price is $32. d. In the following table, complete the short-run supply schedule for the firm (columns 1 and 2) and indicate the profit or loss incurred at each output (column 3). (1) (2) (3) (4) Price Quantity Supplied, Single Firm Profit (+) Quantity Supplied, 1500 Firms Profit (-) $26 5 32 38 M 46 56 66 e. MNow assume that there are 1,500 identical firms in this competitive industry; that is, there are 1,500 firms, each of which has the cost data shown in the table above. Complete the industry supply schedule (column 4) f. Suppose the market demand data for the product are as follows: Price Total Quantity Demanded 526 17,000 32 15,000 38 13,500 41 12,000 46 10,500 56 9500 66 8000 What is the equilibrium price? What is the equilibrium output for the industry? For each firm? What will profit or loss be per unit? Per firm? Will this industry expand or contract in the long run? 1 Most of the unit-cost data are rounded figures from the total-cost figures presented in the previous chapter. Therefore, economic profits calculated from the unit-cost figures will typically vary by a few cents from the profits determined by subtracting actual total cost from total revenue. Here we simply ignore the few-cents differentials. 2 This triple equality does not hald for decreasing-cost industries because MC always remains below ATC if average costs are decreasing. We will discuss this situation of \"natural monopoly\" in . Chapter 8. v 3. Suppose a pure monopolist faces the following demand schedule and the same cost data as the competitive producer discussed in problem 4 at the end of Chapter 7. Calculate the missing TR and MR amounts, and determine the profit-maximizing price and profit-maximizing output for this monopolist. What is the monopolist's profit? Verify your answer graphically and by comparing total revenue and total cost. (LO2) Price Quantity Demanded Total Revenue Marginal Revenue 5115 0 il S 100 a3 7 63 55 43 42 37 i3 29 W e~ N AW = = 6. Explain the general meaning of the following profit payoff matrix for oligopolists X and Y. All profit figures are in thousands. (LO4) page 232 X's possible prices $40 $35 $57 $59 $40 $60 $55 Y's possible prices $50 $55 $35 $69 $58 a. Use the payoff matrix to explain the mutual interdependence that characterizes oligopolistic industries. b. Assuming no collusion between X and Y, what is the likely pricing outcome? c. In view of your answer to part b, explain why price collusion is mutually profitable. Why might there be a temptation to cheat on the collusive agreement? 7. ADVANCED ANALYSIS Construct a game-theory payoff matrix involving two firms and their decisions on high versus low advertising budgets and the effects of each on profits. Show a circumstance in which both firms select high advertising budgets even though both would be more profitable with low advertising budgets. Why won't they unilaterally cut their advertising budgets? (LO4 , L07 ) 8. What assumptions about a rival's response to price changes underlie the kinked-demand curve for oligopolists? Why is there a gap in the oligopolist's marginal-revenue curve? How does the kinked-demand curve explain price rigidity in oligopoly? (LO5 ) 9. Why might price collusion occur in oligopolistic industries? Assess the economic desirability of collusive pricing. What are the main obstacles to collusion? Speculate as to why price leadership is legal in the United States, whereas price-fixing is not. (LO6) 10. Why is there so much advertising in monopolistic competition and oligopoly? How does such advertising help consumers and promote efficiency? How does advertising promote inefficiency? (L07 , LO8 )