1. Why do monopolized markets tend to produce fewer goods than perfectly competitive markets?
2. Offer one example of a barrier to entry created by the market (as opposed to being created by the government). Explain why your example serves as barriers to entry.
3. Patents awarded to pharmaceutical firms serve as barriers to entry. Why would the government create a barrier to entry for these companies?
4. After the patent held for a name brand pharmaceutical expires, competitors can produce identical generic drugs. Even after generics are introduced, name brand pharmaceuticals often remain significantly cheaper. Explain how a firm can continue to charge more for a name brand drug.
5. For many years, the Justice Department has tried to break up large firms like IBM, Microsoft, and most recently Google, on the grounds that their large market share made them essentially monopolies. In a global market, where U.S. firms compete with firms from other countries, would this policy make the same sense as it might in a purely domestic context?

Quantity	Demand (Price)	Marginal Revenue	Marginal Cost	Average Cost
1	$1200	1200	500	500
2	1100	1000	275	388
3	1000	800	225	333
4	900	600	250	313
5	800	400	400	330
6	700	200	500	358
7	600	0	700	407

1. What is this firm's profit-maximizing price? What is its profit-maximizing output?
2. What is the firm's average profit? What is the firm's total profit?
3. If at least one consumer is willing to pay $1200 for this product, why won't the monopolist charge $1200?
4. Are there consumers who want the product but are not willing to pay the profit-maximizing price the firm will charge? How can you tell?
5. If the firm could charge every consumer exactly what that consumer was willing to pay (called perfect price discrimination), would the quantity the firm produced increase, decrease, or remain the same? Would the firm's profits increase, decrease, or remain the same?
6. If public utilities are a natural monopoly, what would be the danger in deregulating them?
7. If public utilities are a natural monopoly, what would be the danger in splitting them into a number of separate competing firms?
8. In the middle of the twentieth century, major U.S. cities had multiple competing city bus companies. Today, there is usually only one and it runs as a subsidized, regulated monopoly. What do you suppose caused the change? (Hint: as demand for public transit fell, what would happen to the average cost of bus rides?
9. The tableto calculate the four-firm concentration ratio for the U.S. auto market. Does this indicate a concentrated market or not?

GM	19%
Ford	17%
Toyota	14%
Chrysler	11%