# Assignment 5- Micro

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Keyana McNeill Econ 202 Assignment 5 (This assignment covers pure monopoly and Monopolistic completion) How does the demand curve look like? Graph it. A demand curve is downward slope. This is due to law of demand. How does the marginal revenue (MR) look like? Is MR greater (above) than the price (remember the price is the demand curve), less than the price (below that the demand curve), equal to the price (the demand curve)? Choose one. Graph the demand curve and the marginal revenue on one graph. Marginal revenue is downward sloping. Marginal Revenue is the additional revenue earned by selling an extra unit of product. MR is less than the price (below the demand curve). What is the profit maximization condition for a monopolist? Condition of profit maximization is Marginal revenue = Marginal Cost (MR=MC) If the price is less than ATC, does the monopolist make profit, lose or break even? Choose one. Lose If the price is equal to ATC, does the monopolist make profit, lose or break even? Choose one. Break even If the price is greater than ATC, does the monopolist make profit, lose or break even? Choose one. Make profit How does the supply curve for a monopolist look like? (Upward sloping, a point obtained by equating MC and MR.) The supply curve, like the demand curve here, is downward sloping. How does the demand curve for a monopolistic competitive firm looks like? Graph it. Demand curve of a monopolistically competitive firm is downward sloping. This is because in the monopolistically competitive market the firm has some degree market power which allows them to set the price whenever they want.
How does the MR line look like? (Downward sloping, horizontal, or vertical)? Downward sloping Is the MR equal, below, or above the demand curve? Choose one. Below Is the demand curve for a monopolistic competitive firm flatter or steeper than the demand curve for a monopolist? The demand curve of a monopolistically competitive firm is steeper than the demand curve for a monopolist. If the price is less than ATC for a monopolistic competitive firm, Does the firm make profit, loss, or break even? Choose one. Loss If the price is greater than ATC, Does the monopolistic firm make profit, loss, or break even? Choose one. Make profit Does the monopolistic firm make profit, losses, or zero economic profit in the long run? Choose one. Make profit Compared to a pure competitive firm in the long run, a monopolistic firm will charge higher or lower price? Will produce more or less; have more less economic profit that is equal to what? Give a number for economic profit for both pure competitive firm and monopolistic competitive firm. Monopolistic firm charges a higher price. It will produce less and earn more economic profit. Economic profit for firms in perfect competition and monopolistic competition is 0.