Econ 101 Final Exam Study Questions June 2011

Econ 101 Final Exam Study Questions June 2011 - 5 Does the...

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FINAL EXAM STUDY QUESTIONS 1. Are economies of scale a barrier to entry? 2. “Allowing a pure monopolist to charge some customers more than others is not appropriate because it is unfair to those who have to pay the highest price.” Evaluate this statement. Are there circumstances in which those who pay the higher price could actually benefit? 3. A perfectly competitive firm can sell all it wants at the existing price. Can a monopoly do that? If it tried to do this, what would happen? Does that mean that a pure monopoly is more constrained in its decision making than a perfect competitor? 4. A pure monopolist is selling fish. At the end of the day, if the fish don’t sell, they will rot, so he lowers the price. What range of the demand curve will the monopolist set his price and what is the likely consequence?
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Unformatted text preview: 5. Does the product differentiation in monopolistic competition make us better off or worse off? 6. Why is there a tendency for an oligopoly to form a cartel or a collusive arrangement? Is collusive activity more or less likely given a smaller number of firms in the market? 7. Compare a monopoly and a perfectly competitive firm in terms of their demand and marginal revenue schedules, their market price, their profits in the short run and the long run, and their efficiency. 8. Explain under what conditions a pure monopolist may be more efficient than a perfect competitor. 9. Under monopolistic competition, what aspects/characterisitcs of monopolistic competition are similar to that of a monopoly and which are similar to the purely competitive market structure?...
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