Profit = TR – TC → Profit = 90Q – 2Q^2 – (100 + 2Q^2) Profit = -100 + 90Q – 4Q^2 Marginal Profit = 90 – 8Q → MP = 0 90 – 8Q = 0 → 8Q = 90 → Monopoly Quantity = 11.25 Substitute Q = 11.25 into P = 90 – 2Q to determine Monopoly Price P = 90 – (2 * 11.25) → P = $67.50 Substitute Q = 11.25 into Profit = -100 + 90Q – 4Q^2 to determine Monopoly Profit Profit = -100 + (90 * 11.25) – (4 * (11.25)^2) → Profit = $406.25 (B) Price = Marginal Cost in a competitive industry‚ therefore‚ set P = MC to
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org/ Copyright © T.Pettinger 2011. All Rights Reserved (For single use license only) www.economicshelp.org Micro Economic Essays Market Structure 1. Discuss how firms within an oligopolistic market compete. 2. Discuss whether monopoly is always an undesirable form of market structure. 3. Explain how interdependence and uncertainty affect the behaviour of firms in Oligopolistic markets 4. Evaluate the view that only producers‚ and not consumers‚ benefit when oligopolistic firms
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Chapter 15 – Mankiw SOLUTIONS TO TEXT PROBLEMS: Quick Quizzes 1. A market might have a monopoly because: (1) a key resource is owned by a single firm; (2) the government gives a single firm the exclusive right to produce some good; or (3) the costs of production make a single producer more efficient than a large number of producers. Examples of monopolies include: (1) the water producer in a small town‚ who owns a key resource‚ the one well in town; (2) a pharmaceutical company that is given a patent
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Maximizing Profits in Market Structures Competitive markets‚ monopolies‚ and oligopolies play a big role in the economy. We will be discussing the characteristics‚ price determination‚ output determination‚ barriers to entry‚ and the role in economy of each market structure. In a competitive market there are many firms that supply the same product‚ such as local gas stations. Mankiw (2007) stated‚ “You may recall that a market is competitive if each buyer and seller is small compared to the size
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ISSN 1045-6333 THE SHAREHOLDER WEALTH MAXIMIZATION NORM AND INDUSTRIAL ORGANIZATION Mark J. Roe Discussion Paper No. 339 11/2001 Harvard Law School Cambridge‚ MA 02138 The Center for Law‚ Economics‚ and Business is supported by a grant from the John M. Olin Foundation. This paper can be downloaded without charge from: The Harvard John M. Olin Discussion Paper Series: http://www.law.harvard.edu/programs/olin_center/ SHAREHOLDER WEALTH MAXIMIZATION JEL Class: D42‚ G32
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marginal costs we can better prepare for economic and financial future. The market structure and the interaction that occurs can be defined by the number of businesses‚ and barriers new firms have when entering a particular market. Perfect competition‚ monopoly‚ monopolistic and oligopoly are four forms of market structures recognized by economists. Private goods are excludable‚ like food‚ clothing‚ toys‚ furniture‚ and cars‚ which are types of goods that can be rival and non-rival. An example‚ rival goods
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compensation. Cost associated with law suits is high. The 1996 anti-counterfeiting consumer protection act it the most recent legislation initiative and provides for other rights like statutory damages for non-willful infringement. Question (2) Monopoly and Dominance is the situation in which one seller or company in the whole market for a given type of product or services. It arises due
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C. Economies of scale. D. Ownership of essential resources. 4. Many people believe that monopolies charge any price they want to without affecting sales. Instead‚ the output level for a profit-maximizing monopoly is determined by: A. Marginal cost = demand. B. Marginal revenue = demand. C. Average total cost = demand. D. Marginal cost = marginal revenue. 5. Allocative inefficiency due to unregulated monopoly is characterized by the condition: A. P = MC. B. P = MR. C. P > MC. D. P > AVC. 6. If a
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SR. NO TOPIC PAGE NO. 1 OLIGOPOLY 3 2 PERFECT COMPETITION 5 3 MONOPOLY 7 4 MONOPOLISTIC 9 5 COMPARISON 11 Oligopoly An Oligopoly is an industry dominated by a few firms‚ e.g. supermarkets‚ petrol‚ car industry etc. The main features of oligopoly: An industry which is dominated by a few firms. Interdependence of firms‚ firms will be affected by how other firms set price and output. Barriers to entry‚ but less than monopoly. Differentiated products‚ advertising is often important Most
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monopolists”. (McConnell & Brue‚ 2008‚ p. 382) These regulations exist to ensure that natural monopolies are not charging consumers monopoly prices which in turn hurt the consumers as well as society as a whole. Industrial regulations affect the market by its regulation of the natural monopolies which in turn protects the markets consumers. These regulations also allow for a fair profit to the natural monopoly by setting a fair rate‚ protecting its consumers‚ but also a “fair return to the enterprises”
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