Question

1) List the five characteristics of pure monopoly.

2) Describe the demand curve facing a pure monopoly and how it differs from that facing a firm in a purely competitive market.

3) Explain why the marginal revenue is equal to the price in pure competition but not in monopoly.

4) Use the chart to solve the following:

Calculate the Marginal Cost at Q 100?

Calculate the Marginal Cost at Q 200?

Calculate the Marginal Cost at Q 300?

Calculate the Average Total Cost at Q 100?

Calculate the Average Total Cost at Q 200?

Calculate the Average Total Cost at Q 300?

Q	P=D	TC
0	$10.00	$1,000
100	$20.00	$2,500
200	$30.00	$4,500

300

$40.00

$7,500

Answer 1

(1): Answer -

*Explanation :-

Five Characteristics Of Pure Monopoly Are Described Below :

(A)Profit Is Maximum There

(B)Firm Is Price Maker

(C)High Barriers To Entry In Market

(D) There Are Single Seller Of Product

(E)Price Discrimination Exist

(2) Answer :-

*Explanation :

=> In Monopoly The Demand Curve Is Downward Sloping. Because Of To Sell One Extra Unit Of Good. The Seller must Lower The Price Of Every Unit Of Goods.

=> In Perfect Competition Demand Curve is Horizontal for Each of the Firms.it Is Because Of There Are So Many Seller In The Market And They Sell Same Product So If Any Firm Sell The Product Higher Price Then market Price Nobody Buy Its product.

So we Clearly Define The Difference Between Both Of Them Pure Monopoly Demand Curve Is Differs Form That Facing A firm In Purely Competitive Market

Q-4 Answer :-

*Explanation :- Marginal Cost = MC

=>Marginal Cost At Q 100 = Change In Total cost/Change In Quantity

Change In Total Cost = $2500-$1000 = $1500

Change In Total Quantity = 100-0 = 100

= $1500/100

Marginal Cost Q 100 = $15

=> MC At Q 200 = ($4500-$2500)/(200-100)

= $2000/100

= $ 20

=> MC At Q 300 = ($7500-$4500)/(300-200)

= $3000/100

= $30

=> Average Total Cost = ATC

==> Average Total Cost At Q 100 = Total Cost / Total Quantity

= $2500/100

= $25

=> ATC At Q 200 = $4500/200

= $22.5

=> ATC At Q 300 = $7500/300

= $ 25