Assume Acme Corporation is a typical monopoly:
a. Construct a graph illustrating Acme's average and marginal cost curves and the demand curve facing it. Identify profit maximizing output and price, total revenues, total costs, and total profits.
b. Assume the economy moves into a recession and the demand for Acme's product falls. On a separate graph, show the effect of the recession on equilibrium price, output, and profits.
c. Based on your answer, comment on the following statement, indicating whether or not you agree with it: "a monopolist can charge whatever price it wants."
Identify three or four barriers to entry that protect monopolists. Find a specific example of a company that uses each of the barriers that you identified to protect its monopoly status and explain how it uses the barriers. To what extent do you expect the barriers to persist over time? What might cause them to be mitigated or eliminated?
Discuss the use of price and non-price competition in monopolistic competition and oligopoly. In your response, include a real-world example of a company in each market structure that uses non-price competition. Also discuss how non-price competition affects equilibrium price and output.
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