Exam 4 - Exam 4 Chapter 13 1. What is meant by market...

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Exam 4 Chapter 13 1. What is meant by market power? What does the elasticity of demand for a good have to do with the potential for a firm to exercise market power over its sales? 2. Why are barriers to entry important to market power? What are some sources of barriers to entry? 3. What can firms with market power do that firms in competitive markets cannot? What limits their choices?
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4. Recall that any profit-maximizing firm will produce up to the point where marginal revenue equals marginal cost. How do you calculate marginal revenue for a monopolist? Why is marginal revenue less than the price for a firm with market power (that can’t price discriminate)? 5. How do you find the profit-maximizing output level and price for a monopolist? How do you find the profit that they earn? Understand Figure 13.5. How do the monopoly profitmaximizing price and quantity compare to the price and quantity that a perfectly competitive industry would provide? 6. Why does monopoly lead to an inefficient outcome for society? How do you measure the efficiency loss (in dollar terms) on a supply and demand diagram?
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7. Why might some of the monopolist’s profits end up as a social loss? What is rent-seeking behavior? Why is it socially wasteful? 8. What do Section 1 and Section 2 of the Sherman Act forbid?
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This note was uploaded on 07/04/2011 for the course ECON 302 taught by Professor Teague during the Spring '11 term at University of Iowa.

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Exam 4 - Exam 4 Chapter 13 1. What is meant by market...

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