Often to secure a monopoly, one must erect barriers to entry to obtain a monopoly. What is this activity called in general and what does it entail specifically?
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Ques. 2List three characteristics of demand curves. Make sure to explain the shape of the curve and the meaning of the vertical and horizontal intercepts.
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Ques. 3Because of rent seeking, a monopoly may end up making zero economic profit. Is the previous statement correct or incorrect? Why?
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Ques. 4What is an isoquant?
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Ques. 5Suppose the U.S. economy enters a recession and incomes fall. What will happen to the equilibrium prices and quantities of normal goods? Would your answer be the same if you were discussing inferior goods? Why or why not?
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Ques. 6If marginal costs for a firm are constant would the average total cost curve still have be u-shaped? Explain.
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Ques. 7A free good is a good whose existence requires no opportunity cost to produce. How is this different from a good that is offered for a price of zero?
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Ques. 8What is rent seeking? How does rent seeking affect the deadweight loss from monopoly?
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Ques. 9The president of a company is told that the fixed costs next year will be higher than anticipated. Even so he has told his operations managers that this should not affect their production levels. Comment on this statement.
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Ques. 10Suppose the government breaks up a single-price monopoly and turns it into a perfectly competitive industry.
What will happen to price and the quantity produced? What will happen to the monopoly's economic profit and the deadweight loss associated with the monopoly?
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