11 T-Mobile 10:36 PM bbhosted.cuny.edu 12 of 12 For Question 38, refer to the gr
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11 T-Mobile 10:36 PM bbhosted.cuny.edu 12 of 12 For Question 38, refer to the graph below. MC ATC Marginal Revenue Demand Quantity 38. In the above graph, the shaded area represents a) total costs for a profit-making monopolist b) total revenues for a profit-making monopolist c) total costs for a firm in a market characterized by monopolistic competition, in the long run d) total revenues for a firm in a market characterized by monopolistic competition, in the long run both (c) and (d) e) 39. A monopolist is a price maker in the sense that... a) it faces a completely elastic demand curve. b) it faces a completely inclastie demand curve. e t can sell a given quantity of output at any price. d) it can set both price and quantity at any point on the market demand curve. e) it can eam a profit at every combination of price and qaantity 40. A monopoly that arises because of economies of scale is referred to as a a) local monopoly. b) natural monopoly c) network monopoly d) regulated monopoly e) exclusionary monopoly 12Explanation / Answer
38. e) both (c) and (d)
Shaded area shows total cost and total revenue of firm in the long run.
39. c) it can sell a given quantity of output at any price.
Monopolistic competition refers to a market situation in which there are large number of buyers and sellers. The sellers sell closely related or differentiated products but not identical product. The products are close substitutes of each other. Product differentiation is the most important feature of monopolistic competition. Each firm under monopolistic competition enjoys the monopoly over the brand of the commodity and thus the firm has the control over the price of the commodity. Under monopolistic competition, MR < AR and AR and MR curve slope downwards and MR curve lies below AR curve. But these curves are more elastic. Example: Firms producing different brands of shampoos like Sunsilk, Pantene, Head & Shoulders, Dove etc. Monopolistic competition combines the features of monopoly and perfect competition.
40. b) natural monopoly
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