Download 1. Given the knowledge that the price is below the ATC curve but

1. Given the knowledge that the price is below the ATC curve but above the AVC curve, will
the firm shut down or produce in the short run? Will they have a profit or a loss?
2. Given the knowledge that the price is at the minimum point of the ATC curve, what do
we know about profit?
3. In the long run, what is the profit for a perfectly competitive market?
4. What are the qualities of a monopoly? Perfect competition? (compare and contrast)
5. What is between monopoly and perfect competition? (few producers)
6. What is like perfect competition, but it has differentiated products?
7. Is a monopoly a price taker?
8. Does a monopoly earn profit in the long run? Short run?
9. Does a perfectly competitive market have market power?
10. Question: Check the correct barrier to entry the scenario describes.
Scenario
Exclusive
Ownership of a
Key Resource
Government
Created
Monopolies
Economies
of Scale
At the national level, the Federal
Communications Commission
licenses only a certain number of
radio and television stations in each
geographic area.
Throughout much of the twentieth
century, many people viewed South
Africa’s De Beers group as a
monopoly because it controlled a
large percentage of diamond
production and sales.
In the electricity industry, low
average total costs are obtained
only through large-scale production.
In other words, the initial cost of
setting up all the necessary wiring
makes it risky and, most likely,
unprofitable for competitors to enter
the market.
11. What is the shape of the ATC curve for monopolies and why is it like that?
12. Is it better for 1 firm to produce of 2 when considering costs for monopolies?
13. MR = P is true for which type of market structure?
14. What does the demand curve look like for perfectly competitive markets? Monopolies?
15. What does the downward sloping demand mean for the monopolies in terms of quantity
and price relationship.