Describe a scenario where having one firm (i.e., a monopoly) would be more
technically efficient than many smaller firms.
Explain how price discrimination affects the allocative efficiency of a
monopoly.
If P > AC for a monopolistically competitive firm, what will happen to
supply and demand in this industry? How will this affect the firm?
If marginal costs are decreasing, will this cause total costs to decrease?
Will it cause average costs to decrease? Explain.
Can an oligopoly earn profits in the long run? Why or Why not?
In the Kinked Demand Curve model for an oligopolist, why is the demand curve
kinked? How does this affect the shape of the MR curve? What is the
significance of the MR curve’s shape?
What is the allocatively efficient price for a pure public good? Explain.
Given the following information, what is the market price and quantity? What
is the socially optimal level of output? How large of a Pigouvian tax is
needed to correct the problem? How much total tax revenue would be collected?
What would be the new price paid by consumers? What would be the new (net)
price received by sellers? What are the gains to society from improving
allocative efficiency?