Econ302-hw5-fall09 - Econ302 HomeworkAssignment5...

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Econ302 Homework Assignment 5 Due Thursday November 19 (Questions to be graded: 2, 4, 5) Name: Section: 1.   What factors determine the amount of monopoly power an individual firm is  likely to have?  Explain each one briefly. 2.  Why is there a social cost to monopoly power?  If the gains to producers from  monopoly power could be redistributed to consumers, would the social cost of  monopoly power be eliminated?  Explain briefly.
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3.  The following table shows the demand curve facing a monopolist who produces at  a constant marginal cost of $10. Price Quantity 18  0 16  4 14  8 12  12 10 16 8 20  6 24  4 28  2 32  0 36 a. Derive the equation of the firm’s marginal revenue curve.
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b. What are the firm’s profit-maximizing output and price?  What is its profit? c. What would the equilibrium price and quantity be in a competitive industry?
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d. What would the social gain be if this monopolist were forced to produce and  price at the competitive equilibrium?  Who would gain and lose as a result?
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4.  A monopolist faces the demand curve P = 11 - Q, where P is measured in dollars 
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Econ302-hw5-fall09 - Econ302 HomeworkAssignment5...

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