Short questions 5. What assumptions are required for a monopoly to charge a price equal to average costs even though it could make much higher profits by charging a higher price? Explain why these assumptions are required. 6. In the neoclassical economy, each firm produces one thing and procures all inputs from efficient markets. Why do firms produce many inputs "in house" in the real world? 7. What is the difference between Bain and Stigler's definitions of barriers to entry? Name one barrier to entry that would qualify for either definition. 8. Why do some economists use advertising dollars to measure inefficiencies of market power in some markets? 9. What is one reason a vertical merger might increase market power? Does your answer require market power in the merged market