NoteTakingAssignmentChp12And21.docx - CHAPTER 12 and 21 NOTE TAKING ASSIGNMENT 1 List the characteristics of monopolist Single Seller No close

NoteTakingAssignmentChp12And21.docx - CHAPTER 12 and 21...

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CHAPTER 12 and 21 NOTE TAKING ASSIGNMENT 1. List the characteristics of monopolist. Single Seller No close substitutes Price Maker Blocked entry Nonprice competition 2. List and explain the barriers to entry. Economies of scale Legal barriers to entry into a monopolistic industry also exist in the forms of patents and licenses. Ownership and control of essential resources is another barrier to entry. Monopolists may use pricing or other strategic barriers such as selective price cutting and advertising. 3. Explain why price is equal to marginal revenue in pure competition but not in a monopoly. Include in your explanation why the marginal revenue curve is steeper than the demand curve for a single price monopolist. In a monopoly the price can be changed by the company. The MR curve is steeper because there is no one else to compete with. 4. Explain how a single-price monopolist determines the optimal price and quantity to maximize profits. By determining the profit maximizing output by finding the MR=MC 5. Explain why there will be a deadweight loss or efficiency loss with a single price monopolist. Pure monopoly does not guarantee profit. The monopolist is not immune from changes in tastes that reduce the demand for its product. Nor is it immune from upward shifting cost curves caused by escalating resource prices. 6. List the conditions necessary for price discrimination. Perfect price discrimination: when a firm charges a different price for every unit consumed. Second-degree price discrimination: charging a different price for different quantities, such as quantity discounts for bulk purchases.
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  • Spring '13
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