Questions from General Economics

Q: Give two examples of price discrimination. In each case, explain

Give two examples of price discrimination. In each case, explain why the monopolist chooses to follow this business strategy

Q: Describe the two problems that arise when regulators tell a natural monopoly

Describe the two problems that arise when regulators tell a natural monopoly that it must set a price equal to marginal cost.

Q: Give an example of a government-created monopoly. Is creating

Give an example of a government-created monopoly. Is creating this monopoly necessarily bad public policy? Explain.

Q: Why is a monopolist’s marginal revenue less than the price of its

Why is a monopolist’s marginal revenue less than the price of its good? Can marginal revenue ever be negative? Explain.

Q: List the three key attributes of monopolistic competition. Draw and explain

List the three key attributes of monopolistic competition. Draw and explain a diagram to show the long-run equilibrium in a monopolistically competitive market. How does this equilibrium differ from t...

Q: Draw the demand, marginal-revenue, average-total cost

Draw the demand, marginal-revenue, average-total cost, and marginal-cost curves for a monopolist. Show the profit-maximizing level of output, the profit maximizing price, and the amount of profit.

Q: How does a monopolist’s quantity of output compare to the quantity of

How does a monopolist’s quantity of output compare to the quantity of output that maximizes total surplus? How does this difference relate to the concept of deadweight loss?

Q: Give two examples of price discrimination. • How does perfect

Give two examples of price discrimination. • How does perfect price discrimination affect consumer surplus, producer surplus, and total surplus?

Q: Describe the ways policymakers can respond to the inefficiencies caused by monopolies

Describe the ways policymakers can respond to the inefficiencies caused by monopolies. List a potential problem with each of these policy responses.

Q: What are the three reasons that a market might have a monopoly

What are the three reasons that a market might have a monopoly? • Give two examples of monopolies and explain the reason for each.