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Tham khảo tài liệu 'câu hỏi đánh giá môn kinh tế vĩ mô bằng tiếng anh- chương 10', kinh tế - quản lý, kinh tế học phục vụ nhu cầu học tập, nghiên cứu và làm việc hiệu quả | Chapter 10 Market Power. Monopoly and Monopsony PART III REVIEW QUESTIONS 1. A monopolist is producing at a point at which marginal cost exceeds marginal revenue. How should it adjust its output to increase profit When marginal cost is greater than marginal revenue the incremental cost of the last unit produced is greater than incremental revenue. The firm would increase its profit by not producing the last unit. It should continue to reduce production thereby decreasing marginal cost and increasing marginal revenue until marginal cost is equal to marginal revenue. 2. We write the percentage markup of prices over marginal cost as P - MC P. For a profit-maximizing monopolist how does this markup depend on the elasticity of demand Why can this markup be viewed as a measure of monopoly power We can show that this measure of market power is equal to the negative inverse of the price elasticity of demand. P - MC 1_ P ed The equation implies that as the elasticity increases demand becomes more elastic the inverse of elasticity decreases and the measure of market power decreases. Therefore as elasticity increases decreases the firm has less more power to increase price above marginal cost. 3. Why is there no market supply curve under conditions of monopoly The monopolist s output decision depends not only on marginal cost but also on the demand curve. Shifts in demand do not trace out a series of prices and quantities 138 Chapter 10 Market Power. Monopoly and Monopsony that we can identify as the supply curve for the firm. Instead shifts in demand lead to changes in price output or both. Thus there is no one-to-one correspondence between the price and the seller s quantity therefore a monopolized market lacks a supply curve. 4. Why might a firm have monopoly power even if it is not the only producer in the market The degree of monopoly or market power enjoyed by a firm depends on the elasticity of the demand curve that it faces. As the elasticity of demand increases i.e.
