UNT ECON 1100

UNT ECON 1100 EXAM 3 A firm gains monopoly power when: - answer -barriers to entry can be erected and maintained. A natural monopoly can: - answer -supply the entire market at a lower cost than many competing firms. A monopolist maximizes short -run profit by producing the level of output where: - answer -MR = MC. A monopolist that earns positive economic profit in the short run will: - answer -earn positive economic profit in the long run if it can maintain barriers to entry, assuming no changes in costs or market demand. The graph illustrates an unregulated, profit -maximizing monopolist that cannot price discriminate. Assuming the firm produces the profit -maximizing level of ouput, it will earn total revenue equal to _____ and pay total costs equal to _____. - answer -$7,20 0; $6,000 Suppose MR = MC = $3 at an output level of 2,000 units. If a monopolist produces and sells 2,000 units, charging a price of $6 per unit and incurring average total cost of $5 per unit, the monopolist will earn profit equal to: - answer -$2,000. Government addresses the inefficiency associated with monopoly by: - answer -restricting market power through antitrust laws and regulation. A monopolistically competitive market is characterized by: - answer -many firms, product differentiation, and easy entry in the long run. A firm in a monopolistically competitive market is similar to a monopoly firm in that: - answer -both maximize profit by producing the quantity where marginal revenue equals marginal cost. The monopolistically competitive firm represented in the graph is in: - answer -long -run equilibrium since it is earning zero profit.