Micro Unit 4.2_4 CW: Monopoly and Monopolistic Competition (MS)

In the short run the pure monopolist will maximize profits by producing at the level of output where the difference between price and average total cost is at a maximum.

Because of the large scale level of production, pure monopolists over-allocate resources to their industry by producing beyond the P=MC output.

The larger the number of firms and the less pronounced the degree of product differentiation, the greater will be the elasticity of a monopolistically competitive seller's demand curve.

The "wastes of monopolistic competition" refer to the fact that in the long-run equilibrium monopolistically competitive firms produce at a point on the rising segment of their average cost curve. 

The "excess capacity" problem associated with monopolistic competition implies that fewer firms could produce the same industry output at a lower total cost.

The monopolistically competitive seller equates price and marginal cost in maximizing profits.

In the long run monopolistically competitive firms tend to make normal profits because they are forced to operate at the minimum point on their average cost curve.

There is evidence that advertising is a barrier to entry which reduces competition.

If the XYZ Company can sell 4 units per week at $10 per unit and 5 units per week at $9 per unit, the marginal revenue of the fifth unit is $5.

The economic profits earned by monopolistically competitive sellers tend to be zero in the long run.

A purely monopolistic producer will maximize profits by producing at that output where price and marginal cost are equal.

Monopolistically competitive sellers realize economic profits in the long-run because entry barriers are significant.

The demand curve of a monopolistically competitive producer is less elastic than that of a purely competitive producer.

In the long run the pure monopolist must produce at that output where average cost is at a minimum.

Because of the ability to influence price, the pure monopolist can increase price and increase volume of sales simultaneously.

The monopolistically competitive seller maximizes profits by equating price and marginal cost.

Monopolistically competitive sellers produce efficiently because they realize only normal profits in the long run.

Monopolistic producers always earn economic profits.