You are a business manager working for a firm in a purely competitive market and you just hired a summer intern who does not understand how to derive the firms’ short run supply curve from the firms’ marginal cost curve.
a. Please explain to the intern how the short run supply curve is derived from the firm’s marginal cost curve. Be specific.
b. Please explain to the intern the characteristics of long run equilibrium of a purely competitive firm and how operating in a purely competitive market might impact the decision-making of the firm in the long run. Please include the implications of long-run equilibrium for productive and allocative efficiency.
i.Please refer to the slides and audio to prepare the answer. Please include the 3 assumptions, as well as the implications for economic profit, productive efficiency and allocative efficiency.
8.For the Pure Monopoly Market Structure1
a. List and explain the characteristics of pure monopoly and how they differ from the characteristics of the pure competition market structure.
i.Please include all 6
b. List and explain how a monopolist would use each of the barriers to entry and include how using that barrier would actually accomplish the monopolists’ objective. Be specific.
c. You are a business manager and you are considering lowering the price of your product. How will knowing where your firm is currently operating on its demand curve help you make a sound business decision?
i.Please refer to the slides and audio to prepare your answer. The monopoly revenue and cost slide should help.
9.For the Pure Monopoly Market Structure2
a. For the monopolist, using the MR MC approach, please explain in detail the steps required to determine:
i. The firm’s optimal level of output.
ii.The firm’s product price that would correspond to that optimal level of output.
iii.the firm has achieved maximum profit
iv. the firm has achieved minimum profit
b. You are employed by a firm with monopoly power. The boss wants to increase profits.
i.Explain the power of price discrimination to your boss.
ii.Explain the requirements and assumptions for successfully implementing this approach.
iii.Explain 2 things that would prevent this approach from being successful.
c. You work for the government in the department that is responsible for dealing with Monopoly issues (the Antitrust Division of the Justice Dept.). Please read through the slides, listen to the audio lectures, then:
i.Explain the dilemma of regulation.
ii.List and explain each of the 3 options covered in the lecture, along with the impact of each option the monopoly firm and the customers.
iii.Pick one of the options and explain why you picked it.
10.For the Monopolistic Competition Market Structure
a. List and explain the characteristics of monopolistic competition and compare them to the characteristics of pure competition and monopoly.
i.Please discuss monopolistic competition, list and explain the characteristics.
b.Product differentiation
i. List and explain the characteristics of product differentiation.
ii. Provide 3 examples of companies actually using these product differentiation techniques and how they are using them.
iii. Explain the impact that product differentiation technique had on the firms’ performance.
c. You are a business manager at a monopolistically competitive firm. Please explain to one of your newly hired workers how to determine the following:
the optimal level of output?
i. the price that corresponds to that optimal level of output?
ii.the firm has achieved maximum profits?
iii. the firm as achieved minimum losses?
Be sure you explain the roles of ATC and AVC.