4 Economics 101 Questions. Answers Will Be Checked Before Awarding Full Points.

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4 Economics 101 Questions. Answers Will Be Checked Before Awarding Full Points.

A monopoly arises for two key reasons, which are government regulation and technology close substitutes and a downward-sloping long-run average cost curve barriers to entry and no close substitutes most firms do not want to be price takers and most firms do not want to be regulated The graph shows the total revenue and total cost curves for Bob's Books, the only bookstore in town. Bob's profit-maximizing quantity of books is 26,000 books a year 4,000 books a year 15,000 books a year 22,000 books a year A perfect price discriminating monopoly produces the same quantity as a single-price monopoly an output at which marginal revenue exceeds marginal cost the same quantity of output as a perfectly competitive market a larger output than a perfectly competitive market iSurrender Getting your hands on a new iPhone means signing a two-year AT&T; contract. Some markets, because of the sheer costs of being a player, tend toward either a single firm or a small number of firms. Everyone hoped the wireless market would be different. A telephone monopoly has been the norm for most of American telecommunication history, except for what may turn out to have been a brief experimental period from 1984 to 2012 or so. It may be that telephone monopolies in America are a national tradition. Source: Slate, June 10, 2008 The wireless market may "tend toward either a single firm or a small number of firms" if .This will justify allowing a regulated monopoly to exist in the wireless market because .iPhone extends its contract with AT&T; no other firms will remain it is a natural monopoly; consumers will face a lower price and a larger quantity with regulation than with an unregulated natural monopoly AT&T; charges a price that eliminates all competition; no other firms will remain it is a natural monopoly; this will create a legal monopoly, and a legal monopoly is always created for the benefit of the consumer AT&T; is the exclusive provider of wireless service for the iPhone. As a result, . demand for wireless service increases competition in the wireless market increases the price of wireless service is higher and the quantity of iPhone services provided is smaller than it otherwise would be demand for wireless service decreases

Explanation / Answer

1 A, C

2 B

3 C

4 A,D

5 D

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