Review Questions for Chapter 10- Market Power: Monopoly and Monopsony
1.Which of the following is true at the output level where P=MC?
The monopolist is maximizing profit.
The monopolist is not maximizing profit and should increase output.
44. The market for wheat consists of 500 identical firms, each with the total and marginal cost functions shown:
TC = 90,000 + 0.00001Q2
MC = 0.00002Q,
where Q is measured in bushels per year. The market demand
Dokuz Eyll University
Faculty of Business
Department of Economics
ECN 2006 PROBLEM SET II KEY (April, 2011)
1) Bud breeds parrots for a living. He has discovered that the production function for parrots (Q) is
Q K 1 2 L1 2 where K is capital (for example
Conigan Box Company produces cardboard boxes that are sold in bundles of 1000 boxes. The market is
highly competitive, with boxes currently selling for $100 per thousand. Conigan's total
and marginal cost curves are:
TC = 3,000,000 + 0.001Q2
MC = 0.002Q