Discussion Set on Monopoly

        1. A monopoly is most likely to emerge and be sustained when firms have U-shaped long-run average total cost curves. True or false? Explain. 2. A monopoly currently is selling at a price of $10, where ATC = $7, MC = $6, & MR=$3. To maximize profit or minimize loss, this firm should lower price and increase output. True or false? Explain. 3. The condition for shutting down the firm is the same for a firm operating under conditions of monopoly as it is for a firm operating under conditions of pure competition. True or false? Explain. 4. A rational monopolist would never choose to operate at a point where P = 20 and MR = -4. True or false? Explain. 5. The supply curve for a monopolist is the portion of the MC curve lying above the AVC curve. True or false? Explain. 6. A monopolist can sell 10 units at a unit price of $12 and 9 units at a unit price of $13. This means that the marginal revenue of the 10th unit is $12. True or false? Explain. 7. Allocative inefficiency and X-inefficiency essentially mean the same thing. True or false? Explain. 8. In the long-run, both allocative inefficiency and X-inefficiency might be found in monopoly but not under conditions of pure competition. True or false? Explain. 9. Assuming no economies of scale and identical costs, if the firms in a purely competitive industry were replaced by a profit maximizing monopolist, the likely result would be an increase in price with the same quantity of output. True or false? Explain.