Microeconomics – Answer questions accordingly. Due in 2 hours (9:30PM EST) – ORIGINAL WORK

1.  A monopoly will look to find where its marginal cost would equal marginal revenue according to a downward sloping demand curve.  For the monopolist, marginal revenue equal marginal cost is the profit maximizing condition, but does this level of production really guarantee a profit?  Is possible for a monopoly to lose money at this point?  How do average total costs figure into the profit equation for a monopoly?

 

2. With regards to monopoly, is it possible for a monopolist to earn zero economic profit?  Is it possible for a monopoly to generate a loss?  How does average total cost figure into monopoly profits?3. However, is it possible to describe market structure by more than one dimension?  For example, what other market characteristics should we consider for oligopoly besides a few large companies controlling most of the market share?4. Branding and product differentiation provide means for companies to create a monopolistic element to competition.  Therefore, monopolistic competition must involve a lot of non-price competition.  What are some of the ways companies engage in non-price competition?

5. Let’s look at the other side of the argument for monopoly.  Without monopoly status from patent law, would drug companies be able to develop and market new drugs?  Consider the average new drug costs about $1.5 billion to successfully bring to market.

6. Is a monopoly a good or bad market structure?

 

7. Let’s integrate price elasticity into market structure.  Would price elasticity of demand change with market structure?