NAME: 1. What are the three characteristics that define \"monopoly\"? (2 points)
ID: 1110709 • Letter: N
Question
NAME: 1. What are the three characteristics that define "monopoly"? (2 points) a. b. C. 2. Name the three principal barriers to entry for a monopoly and give a brief description of each one. 6 points) a. b. C. 3. What is the "profit-maximizing rule" for a monopoly? (2 points) 4. Using the graph below, answer these questions (for b through f, indicate them on the graph and estimate a number from the graph) a. At what quantity of output will this firm produce? (2 points) b. What is marginal revenue at that level of output? (2 points) c. What is price at that level of output? (2 points) d. What is Average Total Cost at this level of production? (2 points) e. What is Profit/Unit at this level of production? (2 points) f. What is Total Profit at this level of production? (2 points) Page 1 of 2Explanation / Answer
Ans:
1) The characteristic of monopoly are
a) Monopoly is a market structure in which goods and services are provided by one single seller or monopolist.
b) monopoly may be formed due to existance of high barrier to enter the industry or market such as legal barriers, capital requirement,etc.
c) Monopoly produces goods which are unique with no close substitutes using specilized information and production techniques.
2) some of the principle barriers to entry for a monopoly are
a) Set up cost: Some industries require high initial investment in technology and assets which deters the initial market entry.
b) Economies of scale:
If the incumbent has explioted the economices of scale through large scale production it becomes difficult for new entrants to operate in the industry
c) Strategic barriers: Strategic barriers such as pricing,Advertising,strong brand by incumbent firms have greater effect for new entrants to enter the market.
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