Question 5,6,7 and 8 are in the file below. 1. Why isn't a monopolist a price taker? 2. A. To sell more what must a monopolist do? B. What does this mean in terms of marginal revenue? 3. What situation allows for a natural monopoly to exist? 4. If there is only one producer of a service due to a natural monopoly, how do societies ensure that the natural monopolist does not earn large monopoly profits?9. A monopolistic competitor has some elements of monopoly and some elements of competition. How does entry of additional monopolistic competitors into a market affect economic profits? 10. The textbook states, "Thus, a monopolistically competitive industry will produce too small a quantity of a good and charge a higher price for it than would a perfectly competitive industry." Explain how this is means that monopolistic competition is not productively efficient?11. Does product differentiation in monopoly competition make us better or worse off? Why?12. If you were an oligopolist and from only an economic standpoint would you want to act as a cartel? Why?13. Define antitrust laws.14. Why is it in the interest of consumers to enforce antitrust laws? (Your answer should include how competition helps increase consumer surplus.)

5. Using the following graph: 1,800- Marginal cost 1,600 - 1,400 Total profit 1,200 Average cost 1,000 Marginal Cost/Marginal Revenue 800 600 400 Demand 200 Marginal revenue 0 -200 5 8 Quantity a - How does the monopolist determine the production level that will maximize profits? (Meaning what determines the quantity that the monopolist will produce?) b - At this quantity how does the monopolist determine the price to charge in the market? c - In this situation does the monopolist earn economic profits? 6. In question five is the monopolist price higher than if the market were competitive? Is price higher than MC? 7. Using The following graph and table: A. What is the total profit of producing 4 units? B. What is total profit of producing at level 5 units? C. Which quantity should the monopolist choose to produce? D. What can you say about the relationship of MR and MC at the fifth unit? 1,800 arginal cost 1,400 1 200 10 1,000 Cost/Total 800 200 200 2 4 Cost Information Revenue Information Total Marginal Average Total Marginal Quantity Cost Cost Cost Quantity Price Revenue Revenue 1500 1500 1 1,20 1.200 1,80 900 1,10 2,200 1,000 2,200 400 733 1,000 3,000 800 DO YOUAWN - 2,70 500 900 3,600 600 3,30 600 DO VaLAWN 800 4,000 400 4,20 900 700 700 4,200 200 5,40 1,200 600 4,200 0 7.20 1,800 900 500 4,000 -200 8. The following exhibit, shows the profit maximizing quantity and resulting quantity, profit, total revenue and total cost for a monopoly market. Using the following exhibit explain how the monopoly market's results are different, when compared to what the results would have been if the market was in perfect competition: Step 2: Look at demand curve to see what price to charge Marginal cost Average P cost Price ($) IS Step 3: Identify profit -Step1: MR = MC Demand Marginal revenue Q Quantity A. In general what is different in terms of quantity of output between the two markets? B. In general what is different in terms of price in the two markets? C. What does this mean in terms of producer and consumer surplus? D. Which market would have greater net consumer and producer surplus