16. Explain the basic characteristics of a pure/perfect competitive market. 17. Under pure competition the demand curve of the individual firm is perfectly elastic, why? 18. Why does the following situation arise under perfect competitive market? Average Revenue (AR)- Marginal Revenue (MR) =Price (P) 19. Explain why price can be substituted for marginal revenue in the MR = MC rule when an industry is purely competitive. 20. Under perfect competition, at what stage can a firm: a. Continue to operate even though it does not realise an economic profit? b. Close or shut down? 21. Explain how a competitive firm will: (a) Attain equilibrium (b) Attain economic profit (c) incur losses 22. What are the characteristics of pure monopoly? Compare them with the characteristics of pure competition 23. Explain the factors that prevent the entry of other firms under monopoly. 24. How do the entry barriers help the monopoly firm to derive economies of scale? 25. Explain why the monopolist's demand curve is downward slopping, causing the MR curve to lie below it? 26. Why does demand curve of monopoly firm differ from that of pure competitive firm? 27. The pure monopolist has no supply curve why? 7 28. Discuss how a monopolist firm adjusts the price on the elastic and inelastic segments of its demand curve in order to increase/maximise its total revenue 29. Explain why a profit maximising monopolist is unlikely to operate on the inelastic part of the demand curve facing him. 30. The following data present the cost and revenue of a pure monopolist. Quantity Total Total AR MR ATC MC Profit/Loss Revenue Cost 1 P162 P190 2 304 270 426 340 528 400 610 470 672 550 714 640 736 750 738 880 10 720 1030 (a) Calculate AR, MR. ATC and Profit/Loss. (b) Plot the AR, MR, ATC and MC schedules on the same graph and estimate the profit-maximising price and quantity. 31. What is price discrimination? 32. How will the monopolist be able to charge different prices to different consumers of similar goods and services in different markets? How does the monopolist separate the markets? 33. Discuss the welfare effects of monopoly

16. Explain the basic characteristics of a pure/perfect competitive market. 17. Under pure competition the demand curve of the individual firm is perfectly elastic, why? 18. Why does the following situation arise under perfect competitive market? Average Revenue (AR)- Marginal Revenue (MR) =Price (P) 19. Explain why price can be substituted for marginal revenue in the MR = MC rule when an industry is purely competitive. 20. Under perfect competition, at what stage can a firm: a. Continue to operate even though it does not realise an economic profit? b. Close or shut down? 21. Explain how a competitive firm will: (a) Attain equilibrium (b) Attain economic profit (c) incur losses 22. What are the characteristics of pure monopoly? Compare them with the characteristics of pure competition 23. Explain the factors that prevent the entry of other firms under monopoly. 24. How do the entry barriers help the monopoly firm to derive economies of scale? 25. Explain why the monopolist's demand curve is downward slopping, causing the MR curve to lie below it? 26. Why does demand curve of monopoly firm differ from that of pure competitive firm? 27. The pure monopolist has no supply curve why? 7 28. Discuss how a monopolist firm adjusts the price on the elastic and inelastic segments of its demand curve in order to increase/maximise its total revenue 29. Explain why a profit maximising monopolist is unlikely to operate on the inelastic part of the demand curve facing him. 30. The following data present the cost and revenue of a pure monopolist. Quantity Total Total AR MR ATC MC Profit/Loss Revenue Cost 1 P162 P190 2 304 270 426 340 528 400 610 470 672 550 714 640 736 750 738 880 10 720 1030 (a) Calculate AR, MR. ATC and Profit/Loss. (b) Plot the AR, MR, ATC and MC schedules on the same graph and estimate the profit-maximising price and quantity. 31. What is price discrimination? 32. How will the monopolist be able to charge different prices to different consumers of similar goods and services in different markets? How does the monopolist separate the markets? 33. Discuss the welfare effects of monopoly

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter13: Firms In Competitive Markets

Section13.2: Profit Maximization And The Competitive Firm's Supply Curve

Problem 2QQ: How does a competitive firm determine its profit-maximizing level of output? Explain. When does a...

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