Written Assignment:

Question #1: How is monopoly different from perfect competition?

Question #2: What is a barrier to entry? Give some examples.

Question #3: How is intellectual property different from other property?

Question #4: In what sense is a natural monopoly "natural"?

Question #5: Is a monopolist a price taker? Explain briefly.

Question #6: How is the perceived demand curve for a monopolistically competitive firm different from the perceived demand curve for a monopoly or a perfectly competitive firm?

Question #7: Will the firms in an oligopoly act more like a monopoly or more like competitors? Briefly explain.

Problem #8

Jane and Tim are the only two growers who provide organically grown corn to a local grocery store. They know that if they cooperated and produced less corn, they could raise the price of the corn. If theywork independently, they will each earn $100. If they decide to work together and both lower their output, they can each earn $150. If one person lowers output and the other does not, the person who lowers output will earn $0 and the other person will capture the entire market and will earn $200.

The table represents the choices available to Jane and Tim. What is the best choice for Tim if he is sure that Jane will cooperate? If Jane thinks Tim will cheat, what should Jane do and why? What is the prisoner's dilemma result? What is the preferred choice if they could ensure cooperation?

A = Work independently

B = Cooperate and Lower Output

(Each results entry lists Tim's earnings first, and Jane's earnings second.)

	Jane
A	B
Tim	A	($100, $100)	($200, $0)
B	($0, $200)	($150, $150)