lectureAssignment14

# lectureAssignment14 - 1 ECONOMICS 100 Lecture...

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ECONOMICS 100 Lecture Assignment #14 (Monopoly) Source: LR11, Chapter 10, to page 245; LR10, Chapter 10, to page 242. 1. Monopoly How do you explain the "monopoly" phenomenon i.e. that one firm can dominate a market, with “no” rivals? 2. Total, Average and Marginal Revenue Under Monopoly Conditions 2.1 In competition, average revenue (i.e. price) is equal to marginal revenue. What is the relationship in a monopoly situation? Explain this relationship. Further, in monopoly, how does marginal revenue relate to the price elasticity of demand? 2.2 If the demand schedule is given by the equation P = 10 -1Q, what is the equation for the MR schedule? Draw D and MR. 3. Industry Equilibrium in Perfect Competition and Monopoly The demand schedule for widgets per month is given below. Price (\$ per ton) Q. Demanded (tons) 160 300 150 400 140 500 130 600 120 700 110 800 100 900 3.1 Widgets are initially produced by a perfectly competitive industry with 100 firms of identical size and cost conditions. Each firm has constant average costs of \$120 per ton. (This assumption is made to make it easy for you to develop an industry supply curve at P = \$120 per ton. In this question, focus on the industry diagram only. Note that we are being silent about the time period – SR vs LR – as this is not the main thrust of the question.

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